Read This Before Buying Sonic Corp (NASDAQ:SONC) For Its Upcoming $0.16 Dividend
Shares of Sonic Corp (NASDAQ:SONC) will begin trading ex-dividend in 3 days. To qualify for the dividend check of $0.16 per share, investors must have owned the shares prior to 06 February 2018, which is the last day the company’s management will finalize their list of shareholders to which they will send dividend payments. Is this future income a persuasive enough catalyst for investors to think about Sonic as an investment today? Below, I’m going to look at the latest data and analyze the stock and its dividend property in further detail. Check out our latest analysis for Sonic
5 questions I ask before picking a dividend stock
When researching a dividend stock, I always follow the following screening criteria:
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 dividend per share risen in the past couple of years?
Is its earnings sufficient to payout dividend at the current rate?
Will it have the ability to keep paying its dividends going forward?
Does Sonic pass our checks?
The current trailing twelve-month payout ratio for the stock is 39.03%, which means that the dividend is covered by earnings. In the near future, analysts are predicting a payout ratio of 41.61%, leading to a dividend yield of around 2.71%. Moreover, EPS should increase to $1.58. If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. Unfortunately, it is really too early to view Sonic as a dividend investment. It has only been consistently paying dividends for 3 years, however, standard practice for reliable payers is to look for a 10-year minimum track record. In terms of its peers, Sonic produces a yield of 2.50%, which is high for Hospitality stocks but still below the market’s top dividend payers.
Next Steps:
Whilst there are few things you may like about Sonic from a dividend stock perspective, the truth is that overall it probably is not the best choice for a dividend investor. But if you are not exclusively a dividend investor, the stock could still be an interesting investment opportunity. Given that this is purely a dividend analysis, you should always research extensively before deciding whether or not a stock is an appropriate investment for you. I always recommend analysing the company’s fundamentals and underlying business before making an investment decision. I’ve put together three relevant factors you should look at:
1. Future Outlook: What are well-informed industry analysts predicting for SONC’s future growth? Take a look at our free research report of analyst consensus for SONC’s outlook.
2. Valuation: What is SONC 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 SONC is currently mispriced by the market.
3. 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.
