If you are an income investor, then Rocky Mountain Dealerships Inc (TSX:RME) should be on your radar. Rocky Mountain Dealerships Inc., together with its subsidiaries, sells, leases, and provides support services for new and used agriculture and industrial equipment in Canada. Over the past 10 years, the CA$252.64M market cap company has been growing its dividend payments, from CA$0.18 to CA$0.46. Currently yielding 3.78%, let’s take a closer look at Rocky Mountain Dealerships’s dividend profile. Check out our latest analysis for Rocky Mountain Dealerships
What Is A Dividend Rock Star?
It is a stock that pays a consistent, reliable and competitive dividend over a long period of time, and is expected to continue to pay in the same manner many years to come. More specifically: Its annual yield is among the top 25% of dividend payers It has paid dividend every year without dramatically reducing payout in the past Its has increased its dividend per share amount over the past It can afford to pay the current rate of dividends from its earnings It is able to continue to payout at the current rate in the future
High Yield And Dependable
Rocky Mountain Dealerships currently yields 3.78%, which is high for Trade Distributors stocks. But the real reason Rocky Mountain Dealerships stands out is because it has a proven track record of continuously paying out this level of dividends, from earnings, to shareholders and can be expected to continue paying in the future. This is a highly desirable trait for a stock holding if you’re investor who wants a robust cash inflow from your portfolio over a long period of time.
If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. In the case of RME it has increased its DPS from CA$0.18 to CA$0.46 in the past 10 years. During this period it has not missed a payment, as one would expect for a company increasing its dividend. These are all positive signs of a great, reliable dividend stock. Rocky Mountain Dealerships has a trailing twelve-month payout ratio of 45.92%, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting lower payout ratio of 30.57%, leading to a dividend yield of 3.78%. However, EPS should increase to CA$1.29, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment.
Rocky Mountain Dealerships ticks all the boxes for what I look for in a dividend stock. If you are looking to build an income focused portfolio, this could be one to include. However, given 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 factors you should further research:
- 1. 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.
- 2. 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.
- 3. Other Dividend Rockstars: Are there strong dividend payers with better 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.