If you are interested in cashing in on MJ Gleeson plc’s (LON:GLE) upcoming dividend of UK£0.12 per share, you only have 4 days left to buy the shares before its ex-dividend date, 07 March 2019, in time for dividends payable on the 05 April 2019. What does this mean for current shareholders and potential investors? Below, I will explain how holding MJ Gleeson can impact your portfolio income stream, by analysing the stock’s most recent financial data and dividend attributes.
5 questions I ask before picking a dividend stock
When researching a dividend stock, I always follow the following screening criteria:
- Is it paying an annual yield above 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?
- 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 MJ Gleeson fit our criteria?
The current trailing twelve-month payout ratio for the stock is 50%, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting a payout ratio of 51% which, assuming the share price stays the same, leads to a dividend yield of around 4.6%. Furthermore, EPS is forecasted to fall to £0.64 in the upcoming year.
When thinking about whether a dividend is sustainable, another factor to consider is the cash flow. 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. The reality is that it is too early to consider MJ Gleeson as a dividend investment. It has only been consistently paying dividends for 7 years, however, standard practice for reliable payers is to look for a 10-year minimum track record.
Relative to peers, MJ Gleeson produces a yield of 4.1%, which is on the low-side for Consumer Durables stocks.
If MJ Gleeson is in your portfolio for cash-generating reasons, there may be better alternatives out there. But if you are not exclusively a dividend investor, the stock could still be an interesting investment opportunity. 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. There are three essential aspects you should further research:
- Future Outlook: What are well-informed industry analysts predicting for GLE’s future growth? Take a look at our free research report of analyst consensus for GLE’s outlook.
- Valuation: What is GLE 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 GLE is currently mispriced by the market.
- Dividend Rockstars: Are there better dividend payers with stronger 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.