Attention dividend hunters! Fastenal Company (NASDAQ:FAST) will be distributing its dividend of $0.37 per share on the 23 May 2018, and will start trading ex-dividend in 3 days time on the 24 April 2018. What does this mean for current shareholders and potential investors? Below, I will explain how holding Fastenal can impact your portfolio income stream, by analysing the stock’s most recent financial data and dividend attributes. Check out our latest analysis for Fastenal
5 questions I ask before picking a dividend stock
When assessing a stock as a potential addition to my dividend Portfolio, I look at these five areas:
- Does it pay an annual yield higher than 75% of dividend payers?
- Has it paid dividend every year without dramatically reducing payout in the past?
- Has it increased its dividend per share amount over the past?
- Can it afford to pay the current rate of dividends from its earnings?
- Will it be able to continue to payout at the current rate in the future?
How does Fastenal fare?
The current trailing twelve-month payout ratio for the stock is 61.87%, meaning the dividend is sufficiently covered by earnings. Going forward, analysts expect FAST’s payout to remain around the same level at 57.52% of its earnings, which leads to a dividend yield of around 3.20%. Moreover, EPS should increase to $2.56. 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. FAST has increased its DPS from $0.25 to $1.48 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. These are all positive signs of a great, reliable dividend stock. In terms of its peers, Fastenal produces a yield of 2.93%, which is on the low-side for Trade Distributors stocks.
Keeping in mind the dividend characteristics above, Fastenal is definitely worth considering for investors 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 pertinent factors you should further research:
- Future Outlook: What are well-informed industry analysts predicting for FAST’s future growth? Take a look at our free research report of analyst consensus for FAST’s outlook.
- Valuation: What is FAST 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 FAST 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 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.