On the 05 January 2018, Insteel Industries Inc (NASDAQ:IIIN) will be paying shareholders an upcoming dividend amount of $1.03 per share. However, investors must have bought the company’s stock before 19 December 2017 in order to qualify for the payment. That means you have only 6 days left! Is this future income a persuasive enough catalyst for investors to think about Insteel Industries as an investment today? Below, I’m going to look at the latest data and analyze the stock and its dividend property in further detail. Check out our latest analysis for Insteel Industries
5 questions I ask before picking a dividend stock
If you are a dividend investor, you should always assess these five key metrics:
- Does it pay an annual yield higher than 75% of dividend payers?
- Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?
- Has it increased its dividend per share amount over the past?
- Can it afford to pay the current rate of dividends from its earnings?
- Based on future earnings growth, will it be able to continue to payout dividend at the current rate?
Does Insteel Industries pass our checks?
Insteel Industries has a payout ratio of 10.12%, which means that the dividend is covered by earnings. However, going forward, analysts expect IIIN’s payout to fall to 4.84% of its earnings, which leads to a dividend yield of around 2.27%. However, EPS should increase to $1.54, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment. 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. Whilst its per-share payments have increased during the past 10 years, there has been some hiccups. Shareholders would have seen a few years of reduced payments in this time. In terms of its peers, Insteel Industries produces a yield of 4.11%, which is on the low-side for building products stocks.
What this means for you:
Are you a shareholder? With Insteel Industries producing strong dividend income for your portfolio over the past few years, you can take comfort in knowing that this stock will still continue to be a robust dividend generator moving forward. But, depending on your current portfolio, it may be worth exploring other dividend stocks to enhance your diversification, or even look at high-growth stocks to supplement your steady income stocks. I recommend continuing your research by checking out my interactive free list of dividend rockstars as well as high-growth stocks to potentially add to your holdings.
Are you a potential investor? With these dividend metrics in mind, I definitely rank Insteel Industries as a strong income stock, and is worth further research for anyone who considers dividends an important part of their portfolio strategy. I also recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. No matter how much of a cash cow the stock is, it is not worth an infinite price. Is Insteel Industries still a bargain? Check our latest free analysis to find out!
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.