Is KLA-Tencor Corporation (NASDAQ:KLAC) An Attractive Dividend Stock?
A sizeable part of portfolio returns can be produced by dividend stocks due to their contribution to compounding returns in the long run. Over the past 10 years, KLA-Tencor Corporation (NASDAQ:KLAC) has returned an average of 3.00% per year to shareholders in terms of dividend yield. Let’s dig deeper into whether KLA-Tencor should have a place in your portfolio. View our latest analysis for KLA-Tencor
How I analyze 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?
Does it consistently pay out dividends without missing a payment of significantly cutting payout?
Has dividend per share risen in the past couple of years?
Can it afford to pay the current rate of dividends from its earnings?
Will it be able to continue to payout at the current rate in the future?
Does KLA-Tencor pass our checks?
The company currently pays out 33.65% of its earnings as a dividend, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting a payout ratio of 31.27%, leading to a dividend yield of 2.08%. In addition to this, EPS should increase to $7.25. If dividend is a key criteria in your investment consideration, then you need to make sure the dividend stock you’re eyeing out is reliable in its payments. In the case of KLAC it has increased its DPS from $0.6 to $2.36 in the past 10 years. During this period it has not missed a payment, as one would expect for a company increasing its dividend. These are all positive signs of a great, reliable dividend stock. Relative to peers, KLA-Tencor has a yield of 2.08%, which is high for industry stocks but still below the low risk savings rate.
Next Steps:
Considering the dividend attributes we analyzed above, KLA-Tencor is definitely worth keeping an eye on for someone 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. I’ve put together three important aspects you should further research:
1. Future Outlook: What are well-informed industry analysts predicting for KLAC’s future growth? Take a look at our free research report of analyst consensus for KLAC’s outlook.
2. Valuation: What is KLAC 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 KLAC is currently mispriced by the market.
3. 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 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.
