Investors who want to cash in on HP Inc’s (NYSE:HPQ) upcoming dividend of $0.14 per share have only 3 days left to buy the shares before its ex-dividend date, 12 June 2018, in time for dividends payable on the 05 July 2018. Should you diversify into HP 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. See our latest analysis for HP
How I analyze a dividend stock
When assessing a stock as a potential addition to my dividend Portfolio, I look at these five areas:
- Is it paying an annual yield above 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?
- Will it have the ability to keep paying its dividends going forward?
Does HP pass our checks?
The current trailing twelve-month payout ratio for the stock is 20.58%, which means that the dividend is covered by earnings. In the near future, analysts are predicting a higher payout ratio of 26.49%, leading to a dividend yield of 2.47%. However, EPS is forecasted to fall to $2.43 in the upcoming year. Therefore, although payout is expected to increase, the fall in earnings may not equate to higher dividend income. 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. 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. In terms of its peers, HP produces a yield of 2.37%, which is high for Tech stocks but still below the market’s top dividend payers.
With these dividend metrics in mind, I definitely rank HP 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. I’ve put together three pertinent aspects you should further examine:
- Future Outlook: What are well-informed industry analysts predicting for HPQ’s future growth? Take a look at our free research report of analyst consensus for HPQ’s outlook.
- Valuation: What is HPQ 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 HPQ 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 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.