What To Know Before Buying Mediaset España Comunicación SA (BME:TL5) For Its Dividend
Dividends play a key role in compounding returns over time and can form a large part of our portfolio return. Historically, Mediaset España Comunicación SA (BME:TL5) has paid a dividend to shareholders. It currently yields 9.4%. Does Mediaset España Comunicación tick all the boxes of a great dividend stock? Below, I’ll take you through my analysis.
Check out our latest analysis for Mediaset España Comunicación
5 checks you should do on a dividend stock
When assessing a stock as a potential addition to my dividend Portfolio, I look at these five areas:
Is its annual yield among the top 25% of dividend-paying companies?
Has it consistently paid a stable dividend without missing a payment or drastically cutting payout?
Has dividend per share amount increased over the past?
Is its earnings sufficient to payout dividend at the current rate?
Based on future earnings growth, will it be able to continue to payout dividend at the current rate?
Does Mediaset España Comunicación pass our checks?
The current trailing twelve-month payout ratio for the stock is 83.8%, which means that the dividend is covered by earnings. In the near future, analysts are predicting a higher payout ratio of 97.1%, leading to a dividend yield of 9.3%. However, EPS is forecasted to fall to €0.60 in the upcoming year. Therefore, although payout is expected to increase, the fall in earnings may not equate to higher dividend income. This also brings about uncertainty around the sustainability of the payout ratio.
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. Dividend payments from Mediaset España Comunicación have been volatile in the past 10 years, with some years experiencing significant drops of over 25%. These characteristics do not bode well for income investors seeking reliable stream of dividends.
Relative to peers, Mediaset España Comunicación generates a yield of 9.4%, which is high for Media stocks.
Next Steps:
Taking all the above into account, Mediaset España Comunicación is a complicated pick for dividend investors given that there are a couple of positive things about it as well as negative. 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, 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 relevant factors you should further examine:
Future Outlook: What are well-informed industry analysts predicting for TL5’s future growth? Take a look at our free research report of analyst consensus for TL5’s outlook.
Valuation: What is TL5 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 TL5 is currently mispriced by the market.
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.
