Investors who want to cash in on Kewaunee Scientific Corporation’s (NASDAQ:KEQU) upcoming dividend of US$0.19 per share have only 4 days left to buy the shares before its ex-dividend date, 08 March 2019, in time for dividends payable on the 25 March 2019. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I examine Kewaunee Scientific’s latest financial data to analyse its dividend characteristics.
5 checks you should do on a dividend stock
Whenever I am looking at a potential dividend stock investment, I always check these five metrics:
- Is it paying an annual yield above 75% of dividend payers?
- Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?
- Has dividend per share amount increased 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?
How does Kewaunee Scientific fare?
Kewaunee Scientific has a trailing twelve-month payout ratio of 47%, which means that the dividend is covered by earnings. Furthermore, analysts have not forecasted a dividends per share for the future, which makes it hard to determine the yield shareholders should expect, and whether the current payout is sustainable, moving forward.
When assessing the forecast sustainability of a dividend it is also worth considering the cash flow of the business. A business with strong cash flow can sustain a higher divided payout ratio than a company with weak cash flow.
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. In the case of KEQU it has increased its DPS from $0.32 to $0.76 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 KEQU a true dividend rockstar.
Relative to peers, Kewaunee Scientific has a yield of 3.0%, which is high for Medical Equipment stocks but still below the market’s top dividend payers.
Keeping in mind the dividend characteristics above, Kewaunee Scientific is definitely worth considering for investors looking to build a dedicated income portfolio. Given that this is purely a dividend analysis, 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. There are three relevant factors you should further examine:
- Future Outlook: What are well-informed industry analysts predicting for KEQU’s future growth? Take a look at our free research report of analyst consensus for KEQU’s outlook.
- Valuation: What is KEQU 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 KEQU 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.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.