Read This Before Buying Medifast Inc (NYSE:MED) For Its Upcoming $0.48 Dividend
Important news for shareholders and potential investors in Medifast Inc (NYSE:MED): The dividend payment of $0.48 per share will be distributed into shareholder on 08 February 2018, and the stock will begin trading ex-dividend at an earlier date, 21 December 2017. Is this future income stream a compelling catalyst for dividend investors to think about the stock as an investment today? Let’s take a look at Medifast’s most recent financial data to examine its dividend characteristics in more detail. See our latest analysis for Medifast
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?
Does it consistently pay out dividends without missing a payment of significantly cutting payout?
Has dividend per share risen in the past couple of years?
Is its earnings sufficient to payout dividend at the current rate?
Based on future earnings growth, will it be able to continue to payout dividend at the current rate?
How well does Medifast fit our criteria?
The current payout ratio for the stock is 62.11%, meaning the dividend is sufficiently covered by earnings. Furthermore, analysts have not forecasted a dividends per share for the future, which makes it hard to determine the yield shareholders should expect, and whether the current payout is sustainable, moving forward. 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. Unfortunately, it is really too early to view Medifast as a dividend investment. It has only been consistently paying dividends for 2 years, however, standard practice for reliable payers is to look for a 10-year minimum track record. Compared to its peers, Medifast generates a yield of 2.61%, which is high for personal products stocks but still below the market’s top dividend payers.
What this means for you:
Are you a shareholder? Investors may not have the best feeling about their investment in Medifast right now, in terms of its dividend attributes. It may be beneficial exploring other income stocks as alternatives to Medifast or even look at high-growth stocks to supplement your steady income stocks. I encourage you to continue your research by checking out my interactive free list of dividend rockstars as well as high-growth stocks to potentially add to your holdings.
Are you a potential investor? After digging a little deeper into Medifast’s yield, it’s easy to see why you should be cautious investing in the company just for the dividend. But if you are not exclusively a dividend investor, the stock could still be an interesting investment opportunity. As always, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. Check our latest free fundmental analysis to explore other aspects of Medifast.
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.
