On the 12 January 2018, Telford Homes Plc (AIM:TEF) will be paying shareholders an upcoming dividend amount of £0.08 per share. However, investors must have bought the company’s stock before 14 December 2017 in order to qualify for the payment. That means you have only 8 days left! Is this future income stream a compelling catalyst for dividend investors to think about TEF as an investment today? Let’s take a look at TEF’s most recent financial data to examine its dividend characteristics in more detail. Check out our latest analysis for Telford Homes
How I analyze 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 dividend per share risen in the past couple of years?
- Does earnings amply cover its dividend payments?
- Based on future earnings growth, will it be able to continue to payout dividend at the current rate?
Does Telford Homes pass our checks?
The company currently pays out 45.44% of its earnings as a dividend, meaning the dividend is sufficiently covered by earnings. However, going forward, analysts expect TEF’s payout to fall to 33.21% of its earnings, which leads to a dividend yield of 4.69%. However, EPS should increase to £0.51, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment. 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. Although TEF’s per share payments have increased in the past 10 years, it has not been a completely smooth ride. Shareholders would have seen a few years of reduced payments in this time. Compared to its peers, Telford Homes produces a yield of 3.88%, which is on the low-side for household durables stocks.
What this means for you:
Are you a shareholder?
Are you a shareholder? With Telford Homes producing strong dividend income for your portfolio over the past few years, you can take comfort in knowing that this stock will still continue to be a robust dividend generator moving forward. But, depending on your current portfolio, it may be beneficial exploring other income stocks to enhance your diversification, or even look at high-growth stocks to supplement your steady income stocks. I suggest continuing your research by exploring my interactive free list of dividend rockstars as well as high-growth stocks to potentially add to your holdings.
Are you a potential investor? Considering the dividend attributes we analyzed above, TEF is definitely worth keeping an eye on for someone looking to build a dedicated income portfolio. As with all investments, 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. No matter how much of a cash cow Telford Homes is, it is not worth an infinite price. Can you buy TEF for a great price? Take a look at our latest free analysis to find out!
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.