Investors who want to cash in on Applied Materials Inc’s (NASDAQ:AMAT) upcoming dividend of US$0.20 per share have only 2 days left to buy the shares before its ex-dividend date, 22 August 2018, in time for dividends payable on the 13 September 2018. What does this mean for current shareholders and potential investors? Below, I will explain how holding Applied Materials can impact your portfolio income stream, by analysing the stock’s most recent financial data and dividend attributes.
5 checks you should do on a dividend stock
When researching a dividend stock, I always follow the following screening criteria:
- Is its annual yield among the top 25% of dividend-paying companies?
- Does it consistently pay out dividends without missing a payment of significantly cutting payout?
- Has the amount of dividend per share grown over the past?
- Is is able to pay the current rate of dividends from its earnings?
- Will it have the ability to keep paying its dividends going forward?
Does Applied Materials pass our checks?
Applied Materials has a trailing twelve-month payout ratio of 3.03%, which means that the dividend is covered by earnings. In the near future, analysts are predicting a higher payout ratio of 17.35%, leading to a dividend yield of 1.70%. Moreover, EPS should increase to $4.02. The higher payout forecasted, along with higher earnings, should lead to greater dividend income for investors moving forward.
If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. AMAT has increased its DPS from $0.24 to $0.80 in the past 10 years. It has also been paying out dividend consistently during this time, as you’d expect for a company increasing its dividend levels. This is an impressive feat, which makes AMAT a true dividend rockstar.
In terms of its peers, Applied Materials produces a yield of 1.83%, which is on the low-side for Semiconductor stocks.
Taking into account the dividend metrics, Applied Materials ticks most of the boxes as a strong dividend investment, putting it in my list of top dividend payers. Given that this is purely a dividend analysis, I recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. There are three relevant aspects you should further research:
- Future Outlook: What are well-informed industry analysts predicting for AMAT’s future growth? Take a look at our free research report of analyst consensus for AMAT’s outlook.
- Valuation: What is AMAT worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether AMAT is currently mispriced by the market.
- Other Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at email@example.com.