What To Know Before Buying Realogy Holdings Corp (NYSE:RLGY) For Its Dividend
A sizeable part of portfolio returns can be produced by dividend stocks due to their contribution to compounding returns in the long run. Realogy Holdings Corp (NYSE:RLGY) has paid a dividend to shareholders in the last few years. It currently yields 1.7%. Does Realogy Holdings tick all the boxes of a great dividend stock? Below, I’ll take you through my analysis.
Check out our latest analysis for Realogy Holdings
Here’s how I find good dividend stocks
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 it increased its dividend per share amount over the past?
Is is able to pay the current rate of dividends from its earnings?
Will it have the ability to keep paying its dividends going forward?
Does Realogy Holdings pass our checks?
The current trailing twelve-month payout ratio for the stock is 11.7%, meaning the dividend is sufficiently covered by earnings. Going forward, analysts expect RLGY’s payout to increase to 14.9% of its earnings, which leads to a dividend yield of 1.8%. However, EPS is forecasted to fall to $1.95 in the upcoming year. Therefore, although payout is expected to increase, the fall in earnings may not equate to higher dividend income.
When considering the sustainability of dividends, it is also worth checking the cash flow of a company. A business with strong cash flow can sustain a higher divided payout ratio than a company with weak cash flow.
If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. The reality is that it is too early to consider Realogy Holdings as a dividend investment. It has only been consistently paying dividends for 2 years, however, standard practice for reliable payers is to look for a 10-year minimum track record.
In terms of its peers, Realogy Holdings produces a yield of 1.7%, which is on the low-side for Real Estate stocks.
Next Steps:
If you are building an income portfolio, then Realogy Holdings is a complicated choice since it has some positive aspects as well as negative ones. However, if you are not strictly just a dividend investor, the stock could still offer some interesting investment opportunities. Given that this is purely a dividend analysis, I recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. Below, I’ve compiled three relevant aspects you should look at:
Future Outlook: What are well-informed industry analysts predicting for RLGY’s future growth? Take a look at our free research report of analyst consensus for RLGY’s outlook.
Valuation: What is RLGY 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 RLGY 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.
