InvoCare Limited (ASX:IVC): Dividend Is Coming In 2 Days, Should You Buy?
Attention dividend hunters! InvoCare Limited (ASX:IVC) will be distributing its dividend of AU$0.17 per share on the 05 October 2018, and will start trading ex-dividend in 2 days time on the 05 September 2018. Is this future income stream a compelling catalyst for dividend investors to think about the stock as an investment today? Let’s take a look at InvoCare’s most recent financial data to examine its dividend characteristics in more detail.
See our latest analysis for InvoCare
5 questions to ask before buying a dividend stock
When assessing a stock as a potential addition to my dividend Portfolio, I look at these five areas:
Is it paying an annual yield above 75% of dividend payers?
Has it paid dividend every year without dramatically reducing payout in the past?
Has dividend per share amount increased over the past?
Is its earnings sufficient to payout dividend at the current rate?
Will the company be able to keep paying dividend based on the future earnings growth?
Does InvoCare pass our checks?
InvoCare has a trailing twelve-month payout ratio of 64.3%, meaning the dividend is sufficiently covered by earnings. Going forward, analysts expect IVC’s payout to increase to 80.0% of its earnings, which leads to a dividend yield of around 3.6%. However, EPS is forecasted to fall to A$0.57 in the upcoming year. Therefore, although payout is expected to increase, the fall in earnings may not equate to higher dividend income.
If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. IVC has increased its DPS from A$0.23 to A$0.45 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 IVC a true dividend rockstar.
In terms of its peers, InvoCare generates a yield of 3.5%, which is high for Consumer Services stocks but still below the market’s top dividend payers.
Next Steps:
Keeping in mind the dividend characteristics above, InvoCare is definitely worth considering for investors looking to build a dedicated income portfolio. Given that this is purely a dividend analysis, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. Below, I’ve compiled three relevant aspects you should further examine:
Future Outlook: What are well-informed industry analysts predicting for IVC’s future growth? Take a look at our free research report of analyst consensus for IVC’s outlook.
Valuation: What is IVC 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 IVC 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 editorial-team@simplywallst.com.
