Have you been waiting for Rocky Mountain Chocolate Factory Inc’s (NASDAQ:RMCF) upcoming dividend of $0.12 per share? Then you only have to wait 3 more days before the stock pays out on 08 December 2017, and starts trading ex-dividend on the 22 November 2017. What does this mean for current shareholders and potential investors? Below, I will explain how holding RMCF can impact your portfolio income stream, by analysing the stock’s most recent financial data and dividend attributes. See our latest analysis for RMCF
How I analyze a dividend stock
Whenever I am looking at a potential dividend stock investment, I always check these five metrics:
- Is its annual yield among the top 25% of dividend payers?
- Does it consistently pay out dividends without missing a payment or 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 Rocky Mountain Chocolate Factory fit our criteria?
The current payout ratio for the stock is 80.70%, which means that the dividend is 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. If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. In the case of RMCF it has increased its DPS from $0.4 to $0.48 in the past 10 years. It has also been paying out dividend consistently during this time, as you’d expect for a company increasing its dividend levels. This is an impressive feat, which makes RMCF a true dividend rockstar. Relative to peers, Rocky Mountain Chocolate Factory produces a yield of 4.11%, which is high for food products stocks.
What this means for you:
Are you a shareholder? Investors of Rocky Mountain Chocolate Factory can continue to expect strong dividends from the stock moving forward. With its favorable dividend characteristics, RMCF is one worth keeping around in your income portfolio. 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 recommend continuing your research by taking a look at 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, RMCF is definitely worth keeping an eye on for someone looking to build a dedicated income portfolio. 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. Whether or not you like RMCF as a dividend stock, it’s still worth checking the price tag. Can you still benefit from a mispricing of the stock? Dig deeper in 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.