What Makes SalMar ASA (OB:SALM) A Great Dividend Stock?
Over the past 10 years SalMar ASA (OB:SALM) has been paying dividends to shareholders. The company currently pays out a dividend yield of 4.5% to shareholders, making it a relatively attractive dividend stock. Does SalMar tick all the boxes of a great dividend stock? Below, I’ll take you through my analysis.
Check out our latest analysis for SalMar
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5 checks you should do on a dividend stock
Whenever I am looking at a potential dividend stock investment, I always check these five metrics:
Is their annual yield among the top 25% of dividend payers?
Has it consistently paid a stable dividend without missing a payment or drastically cutting payout?
Has dividend per share amount increased 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?
Does SalMar pass our checks?
SalMar has a trailing twelve-month payout ratio of 79%, which means that the dividend is covered by earnings. In the near future, analysts are predicting lower payout ratio of 70% which, assuming the share price stays the same, leads to a dividend yield of 5.3%. However, EPS should increase to NOK28.22, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment.
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. Cash flow is important because companies with strong cash flow can usually sustain higher payout ratios.
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. SALM has increased its DPS from NOK1.1 to NOK19 in the past 10 years. During this period it has not missed a payment, as one would expect for a company increasing its dividend. This is an impressive feat, which makes SALM a true dividend rockstar.
Relative to peers, SalMar produces a yield of 4.5%, which is high for Food stocks but still below the market’s top dividend payers.
Next Steps:
Considering the dividend attributes we analyzed above, SalMar is definitely worth keeping an eye on for someone looking to build a dedicated income portfolio. 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. Below, I’ve compiled three essential aspects you should look at:
Future Outlook: What are well-informed industry analysts predicting for SALM’s future growth? Take a look at our free research report of analyst consensus for SALM’s outlook.
Valuation: What is SALM 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 SALM is currently mispriced by the market.
Other 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.
