What Should You Know Before Buying Flowtech Fluidpower plc (LON:FLO) For Its Dividend
Dividends play a key role in compounding returns over time and can form a large part of our portfolio return. Flowtech Fluidpower plc (AIM:FLO) has returned to shareholders over the past 3 years, an average dividend yield of 4.00% annually. Should it have a place in your portfolio? Let’s take a look at Flowtech Fluidpower in more detail. Check out our latest analysis for Flowtech Fluidpower
5 questions to ask before buying a dividend stock
When researching a dividend stock, I always follow the following screening criteria:
Is their annual yield among the top 25% of dividend payers?
Does it consistently pay out dividends without missing a payment of significantly cutting payout?
Has the amount of dividend per share grown over the past?
Is is able 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?
How well does Flowtech Fluidpower fit our criteria?
Flowtech Fluidpower has a trailing twelve-month payout ratio of 58.77%, meaning the dividend is sufficiently covered by earnings. However, going forward, analysts expect FLO’s payout to fall to 37.47% of its earnings, which leads to a dividend yield of around 3.40%.
If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. Unfortunately, it is really too early to view Flowtech Fluidpower as a dividend investment. It has only been consistently paying dividends for 3 years, however, standard practice for reliable payers is to look for a 10-year minimum track record. Relative to peers, Flowtech Fluidpower produces a yield of 3.00%, which is high for Trade Distributors stocks but still below the market’s top dividend payers.
Next Steps:
Whilst there are few things you may like about Flowtech Fluidpower from a dividend stock perspective, the truth is that overall it probably is not the best choice for a dividend investor. But if you are not exclusively a dividend investor, the stock could still be an interesting investment opportunity. 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 pertinent factors you should look at:
1. Future Outlook: What are well-informed industry analysts predicting for FLO’s future growth? Take a look at our free research report of analyst consensus for FLO’s outlook.
2. Valuation: What is FLO 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 FLO is currently mispriced by the market.
3. 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.
