Is Resources Connection Inc (NASDAQ:RECN) A Great Dividend Stock?
A large part of investment returns can be generated by dividend-paying stock given their role in compounding returns over time. Over the past 8 years, Resources Connection Inc (NASDAQ:RECN) has returned an average of 2.00% per year to shareholders in terms of dividend yield. Should it have a place in your portfolio? Let’s take a look at Resources Connection in more detail. Check out our latest analysis for Resources Connection
5 questions I ask before picking 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?
Has it paid dividend every year without dramatically reducing payout in the past?
Has it increased its dividend per share amount over the past?
Is it able to pay the current rate of dividends from its earnings?
Will it be able to continue to payout at the current rate in the future?
How does Resources Connection fare?
The current trailing twelve-month payout ratio for the stock is 78.15%, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting lower payout ratio of 45.52%, leading to a dividend yield of around 3.03%. However, EPS should increase to $0.81, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment. If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. The reality is that it is too early to consider Resources Connection as a dividend investment. It has only been consistently paying dividends for 8 years, however, standard practice for reliable payers is to look for a 10-year minimum track record. Compared to its peers, Resources Connection generates a yield of 3.03%, which is high for Professional Services stocks but still below the market’s top dividend payers.
Next Steps:
Whilst there are few things you may like about Resources Connection 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, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. Below, I’ve compiled three important aspects you should further research:
Future Outlook: What are well-informed industry analysts predicting for RECN’s future growth? Take a look at our free research report of analyst consensus for RECN’s outlook.
Valuation: What is RECN 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 RECN is currently mispriced by the market.
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.
