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On the 25 September 2018, MyState Limited (ASX:MYS) will be paying shareholders an upcoming dividend amount of AU$0.14 per share. However, investors must have bought the company’s stock before 23 August 2018 in order to qualify for the payment. That means you have only 2 days left! Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I examine MyState’s latest financial data to analyse its dividend characteristics.
How I analyze a dividend stock
If you are a dividend investor, you should always assess these five key metrics:
Is its annual yield among the top 25% of dividend-paying companies?
Has it paid dividend every year without dramatically reducing payout in the past?
Has the amount of dividend per share grown 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?
How well does MyState fit our criteria?
The current trailing twelve-month payout ratio for the stock is 82.21%, which means that the dividend is covered by earnings. In the near future, analysts are predicting a payout ratio of 82.69%, leading to a dividend yield of around 6.53%. Furthermore, EPS should increase to A$0.36.
If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. Unfortunately, it is really too early to view MyState as a dividend investment. It has only been consistently paying dividends for 9 years, however, standard practice for reliable payers is to look for a 10-year minimum track record.
Relative to peers, MyState has a yield of 5.87%, which is high for Mortgage stocks.
Taking into account the dividend metrics, MyState ticks most of the boxes as a strong dividend investment, putting it in my list of top dividend payers. 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. There are three relevant factors you should look at:
Future Outlook: What are well-informed industry analysts predicting for MYS’s future growth? Take a look at our free research report of analyst consensus for MYS’s outlook.
Valuation: What is MYS 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 MYS 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 email@example.com.