On the 25 April 2019, Piaggio & C. SpA (BIT:PIA) will be paying shareholders an upcoming dividend amount of €0.09 per share. However, investors must have bought the company's stock before 23 April 2019 in order to qualify for the payment. That means you have only 3 days left! What does this mean for current shareholders and potential investors? Below, I will explain how holding Piaggio & C can impact your portfolio income stream, by analysing the stock's most recent financial data and dividend attributes.
5 checks you should use to assess a dividend stock
If you are a dividend investor, you should always assess these five key metrics:
- Does it pay an annual yield higher than 75% of dividend payers?
- Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?
- Has the amount of dividend per share grown over the past?
- 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 Piaggio & C pass our checks?
Piaggio & C has a trailing twelve-month payout ratio of 89%, meaning the dividend is sufficiently covered by earnings. However, going forward, analysts expect PIA's payout to fall to 58% of its earnings. Assuming a constant share price, this equates to a dividend yield of 4.1%. However, EPS should increase to €0.13, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment.
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. Companies with strong cash flow can sustain a higher payout ratio, while companies with weaker cash flow generally cannot.
If there is one thing that you want to be reliable in your life, it's dividend stocks and their constant income stream. Whilst its per-share payments have increased during the past 10 years, there has been some hiccups. Shareholders would have seen a few years of reduced payments in this time.
Relative to peers, Piaggio & C produces a yield of 3.5%, which is on the low-side for Auto stocks.
Taking into account the dividend metrics, Piaggio & C ticks most of the boxes as a strong dividend investment, putting it in my list of top dividend payers. 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. I've put together three essential factors you should look at:
- Future Outlook: What are well-informed industry analysts predicting for PIA’s future growth? Take a look at our free research report of analyst consensus for PIA’s outlook.
- Valuation: What is PIA 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 PIA 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.
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.