If you are interested in cashing in on Dime Community Bancshares Inc’s (NASDAQ:DCOM) upcoming dividend of US$0.14 per share, you only have 3 days left to buy the shares before its ex-dividend date, 05 November 2018, in time for dividends payable on the 13 November 2018. Should you diversify into Dime Community Bancshares 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.
5 questions I ask before picking a dividend stock
Whenever I am looking at a potential dividend stock investment, I always check these five metrics:
- 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 dividend per share risen in the past couple of years?
- Is is able to pay the current rate of dividends from its earnings?
- Will the company be able to keep paying dividend based on the future earnings growth?
How well does Dime Community Bancshares fit our criteria?
The company currently pays out 38% 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 42%, leading to a dividend yield of around 3.4%. Moreover, EPS is forecasted to fall to $1.3 in the upcoming year.
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. A business with strong cash flow can sustain a higher divided payout ratio than a company with weak cash flow.
If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. DCOM investors will be well aware there has not been any increase in the dividend payments over the last 10 years, although the payments have at least been steady. However, income investors that value stability over growth may still find DCOM appealing.
In terms of its peers, Dime Community Bancshares generates a yield of 3.4%, which is on the low-side for Mortgage stocks.
Keeping in mind the dividend characteristics above, Dime Community Bancshares is definitely worth considering for investors looking to build a dedicated income portfolio. 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 further research:
- Future Outlook: What are well-informed industry analysts predicting for DCOM’s future growth? Take a look at our free research report of analyst consensus for DCOM’s outlook.
- Valuation: What is DCOM 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 DCOM 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 firstname.lastname@example.org.