If you are interested in cashing in on Legal & General Group Plc's (LON:LGEN) upcoming dividend of UK£0.12 per share, you only have 3 days left to buy the shares before its ex-dividend date, 25 April 2019, in time for dividends payable on the 06 June 2019. Should you diversify into Legal & General Group and boost your portfolio income stream? Well, keep on reading because today, I'm going to look at the latest data and analyze the stock and its dividend property in further detail.
What Is A Dividend Rock Star?
It is a stock that pays a reliable and steady dividend over the past decade, at a rate that is competitive relative to the other dividend-paying companies on the market. More specifically:
- Its annual yield is among the top 25% of dividend payers
- It consistently pays out dividend without missing a payment or significantly cutting payout
- Its has increased its dividend per share amount over the past
- It is able to pay the current rate of dividends from its earnings
- It is able to continue to payout at the current rate in the future
High Yield And Dependable
Legal & General Group's yield sits at 5.6%, which is high for Insurance stocks. But the real reason Legal & General Group stands out is because it has a high chance of being able to continue to pay dividend at this level for years to come, something that is quite desirable if you are looking to create a portfolio that generates a steady stream of income.
If there's one type of stock you want to be reliable, it's dividend stocks and their stable income-generating ability. In the case of LGEN it has increased its DPS from £0.041 to £0.16 in the past 10 years. It has also been paying out dividend consistently during this time, as you'd expect for a company increasing its dividend levels. This is an impressive feat, which makes LGEN a true dividend rockstar.
Legal & General Group has a trailing twelve-month payout ratio of 55%, which means that the dividend is covered by earnings. In the near future, analysts are predicting a higher payout ratio of 63% which, assuming the share price stays the same, leads to a dividend yield of around 6.5%. In addition to this, EPS should increase to £0.34. The higher payout forecasted, along with higher earnings, should lead to greater dividend income for investors moving forward.
If you want to dive deeper into the sustainability of a certain payout ratio, you may wish to consider the cash flow of the business. Companies with strong cash flow can sustain a higher payout ratio, while companies with weaker cash flow generally cannot.
Legal & General Group's strong dividend attributes make it, without a doubt, a stock dividend investors should be considering for their portfolios. However, given 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 essential factors you should further examine:
- Future Outlook: What are well-informed industry analysts predicting for LGEN’s future growth? Take a look at our free research report of analyst consensus for LGEN’s outlook.
- Valuation: What is LGEN 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 LGEN is currently mispriced by the market.
- Other Dividend Rockstars: Are there strong dividend payers with better fundamentals out there? Check out our free list of these great stocks here.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.