Read This Before Buying Sonic Healthcare Limited (ASX:SHL) For Its Upcoming $0.32 Dividend
Important news for shareholders and potential investors in Sonic Healthcare Limited (ASX:SHL): The dividend payment of A$0.32 per share will be distributed into shareholder on 10 April 2018, and the stock will begin trading ex-dividend at an earlier date, 06 March 2018. 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 Sonic Healthcare’s most recent financial data to examine its dividend characteristics in more detail. Check out our latest analysis for Sonic Healthcare
How I analyze a dividend stock
When researching a dividend stock, I always follow the following screening criteria:
Is its annual yield among the top 25% of dividend-paying companies?
Does it consistently pay out dividends without missing a payment or significantly cutting payout?
Has it increased its dividend per share amount over the past?
Can it afford to pay the current rate of dividends from its earnings?
Based on future earnings growth, will it be able to continue to payout dividend at the current rate?
How well does Sonic Healthcare fit our criteria?
The current trailing twelve-month payout ratio for the stock is 71.17%, meaning the dividend is sufficiently covered by earnings. Going forward, analysts expect SHL’s payout to remain around the same level at 75.86% of its earnings, which leads to a dividend yield of 3.52%. In addition to this, EPS should increase to A$1.19. If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. SHL has increased its DPS from A$0.49 to A$0.78 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. These are all positive signs of a great, reliable dividend stock. In terms of its peers, Sonic Healthcare produces a yield of 3.18%, which is high for Healthcare stocks but still below the market’s top dividend payers.
Next Steps:
With these dividend metrics in mind, I definitely rank Sonic Healthcare 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 recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. There are three essential aspects you should look at:
Future Outlook: What are well-informed industry analysts predicting for SHL’s future growth? Take a look at our free research report of analyst consensus for SHL’s outlook.
Valuation: What is SHL 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 SHL 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.
