What To Know Before Buying Science Applications International Corporation (NYSE:SAIC) For Its Dividend
Dividends can be underrated but they form a large part of investment returns, playing an important role in compounding returns in the long run. In the past 4 years Science Applications International Corporation (NYSE:SAIC) has returned an average of 2.00% per year to investors in the form of dividend payouts. Let’s dig deeper into whether Science Applications International should have a place in your portfolio. Check out our latest analysis for Science Applications International
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 it the top 25% annual dividend yield payer?
Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?
Has the amount of dividend per share grown over the past?
Does earnings amply cover its dividend payments?
Will it be able to continue to payout at the current rate in the future?
How well does Science Applications International fit our criteria?
The company currently pays out 33.02% of its earnings as a dividend, according to its trailing twelve-month data, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting a payout ratio of 31.60%, leading to a dividend yield of around 1.68%. Moreover, EPS should increase to $3.93. If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. The reality is that it is too early to consider Science Applications International as a dividend investment. It has only been consistently paying dividends for 4 years, however, standard practice for reliable payers is to look for a 10-year minimum track record. Relative to peers, Science Applications International generates a yield of 1.60%, which is high for IT stocks but still below the market’s top dividend payers.
Next Steps:
Whilst there are few things you may like about Science Applications International from a dividend stock perspective, the truth is that overall it probably is not the best choice for a dividend investor. 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 essential aspects you should further research:
Future Outlook: What are well-informed industry analysts predicting for SAIC’s future growth? Take a look at our free research report of analyst consensus for SAIC’s outlook.
Valuation: What is SAIC 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 SAIC 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 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.
