Attention dividend hunters! Rocky Mountain Dealerships Inc (TSE:RME) will be distributing its dividend of CA$0.12 per share on the 28 September 2018, and will start trading ex-dividend in 2 days time on the 13 September 2018. Is this future income a persuasive enough catalyst for investors to think about Rocky Mountain Dealerships 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.
5 checks you should do on 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-paying companies?
- Does it consistently pay out dividends without missing a payment of significantly cutting payout?
- Has dividend per share amount increased over the past?
- Does earnings amply cover its dividend payments?
- Will the company be able to keep paying dividend based on the future earnings growth?
Does Rocky Mountain Dealerships pass our checks?
The company currently pays out 39.5% of its earnings as a dividend, according to its trailing twelve-month data, 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.
If you want to dive deeper into the sustainability of a certain payout ratio, you may wish to consider the cash flow of the business. Cash flow is important because companies with strong cash flow can usually sustain higher payout ratios.
If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. RME has increased its DPS from CA$0.18 to CA$0.49 in the past 10 years. During this period it has not missed a payment, as one would expect for a company increasing its dividend. This is an impressive feat, which makes RME a true dividend rockstar.
Compared to its peers, Rocky Mountain Dealerships has a yield of 4.6%, which is high for Trade Distributors stocks but still below the market’s top dividend payers.
Considering the dividend attributes we analyzed above, Rocky Mountain Dealerships is definitely worth keeping an eye on for someone looking to build a dedicated income portfolio. 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. I’ve put together three relevant aspects you should look at:
- Future Outlook: What are well-informed industry analysts predicting for RME’s future growth? Take a look at our free research report of analyst consensus for RME’s outlook.
- Valuation: What is RME 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 RME 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 past 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. For errors that warrant correction please contact the editor at email@example.com.