Attention dividend hunters! Graham Corporation (NYSE:GHM) will be distributing its dividend of $0.09 per share in 3 days time, on the 21 November 2017, and will start trading ex-dividend on the 06 November 2017. Should you diversify into GHM and boost your portfolio income stream? Well, keep on reading because today, I’m going to look at the latest data and analyze the stock and its dividend property in further detail. See our latest analysis for GHM
5 questions to ask before buying 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 it increased its dividend per share amount over the past?
- Can it afford to pay the current rate of dividends from its earnings?
- Will the company be able to keep paying dividend based on the future earnings growth?
How does Graham fare?
The company currently pays out 76.51% of its earnings as a dividend, meaning the dividend is sufficiently covered by earnings. Analysts have not forecasted a dividends per share for the future, which makes it hard to determine the yield shareholders should expect to see moving forward. Reliablity is an important factor for dividend stocks, particularly for income investors who want a strong track record of payment and a positive outlook for future payout. GHM has increased its DPS from $0.06 to $0.36 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. These are all positive signs of a great, reliable dividend stock. Relative to peers, GHM has a yield of 1.93%, which is high for machinery stocks but still below the low risk savings rate.
What this means for you:
Are you a shareholder? If GHM is in your portfolio for cash-generating reasons, there may be better alternatives out there. It may be beneficial exploring other dividend stocks as alternatives to GHM or even look at high-growth stocks to supplement your steady income stocks. I recommend continuing your research by exploring my interactive free list of dividend rockstars as well as high-growth stocks to potentially add to your holdings.
Are you a potential investor? If you are building an income portfolio, then Graham is a complicated choice since it has some positive aspects as well as negative ones. But if you are not exclusively a dividend investor, GHM could still be an interesting investment opportunity. As with all investments, you should always research extensively before deciding whether or not a stock is an appropriate investment for you. I always recommend analysing the company’s fundamentals and underlying business before making an investment decision. Check our latest free fundmental analysis to explore other aspects of GHM.
To help readers see pass 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.