Have you been keeping an eye on PACCAR Inc’s (NASDAQ:PCAR) upcoming dividend of US$0.28 per share payable on the 05 September 2018? Then you only have 2 days left before the stock starts trading ex-dividend on the 13 August 2018. What does this mean for current shareholders and potential investors? Below, I will explain how holding PACCAR can impact your portfolio income stream, by analysing the stock’s most recent financial data and dividend attributes.
5 checks you should do on 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 it paid dividend every year without dramatically reducing payout in the past?
- Has dividend per share amount increased over the past?
- Is is able to pay the current rate of dividends from its earnings?
- Based on future earnings growth, will it be able to continue to payout dividend at the current rate?
How well does PACCAR fit our criteria?
The company currently pays out 17.57% of its earnings as a dividend, according to its trailing twelve-month data, which means that the dividend is covered by earnings. Going forward, analysts expect PCAR’s payout to increase to 41.52% of its earnings, which leads to a dividend yield of 3.82%. In addition to this, EPS should increase to $6.08. The higher payout forecasted, along with higher earnings, should lead to greater dividend income for investors moving forward.
If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. Although PCAR’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.
In terms of its peers, PACCAR generates a yield of 3.61%, which is high for Machinery stocks but still below the market’s top dividend payers.
With these dividend metrics in mind, I definitely rank PACCAR as a strong income stock, and is worth further research for anyone who considers dividends an important part of their portfolio strategy. 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. Below, I’ve compiled three key factors you should look at:
- Future Outlook: What are well-informed industry analysts predicting for PCAR’s future growth? Take a look at our free research report of analyst consensus for PCAR’s outlook.
- Valuation: What is PCAR 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 PCAR 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.