Tecnoglass Inc. (NASDAQ:TGLS): 3 Days To Buy Before The Ex-Dividend Date
Important news for shareholders and potential investors in Tecnoglass Inc. (NASDAQ:TGLS): The dividend payment of US$0.14 per share will be distributed to shareholders on 28 February 2019, and the stock will begin trading ex-dividend at an earlier date, 30 January 2019. What does this mean for current shareholders and potential investors? Below, I will explain how holding Tecnoglass can impact your portfolio income stream, by analysing the stock’s most recent financial data and dividend attributes.
See our latest analysis for Tecnoglass
5 checks you should use to assess a dividend stock
Whenever I am looking at a potential dividend stock investment, I always check these five metrics:
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 the amount of dividend per share grown over the past?
Is its earnings sufficient to payout dividend at the current rate?
Will it be able to continue to payout at the current rate in the future?
How does Tecnoglass fare?
The current trailing twelve-month payout ratio for TGLS is 137%, meaning the dividend is not sufficiently covered by its earnings. In the near future, analysts are predicting a more sensible payout ratio of 63%, which, assuming the share price stays the same, leads to a dividend yield of 6.6%. Furthermore, EPS should increase to $0.71, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment.
When considering the sustainability of dividends, it is also worth checking the cash flow of a company. A business with strong cash flow can sustain a higher divided payout ratio than a company with weak cash flow.
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 Tecnoglass as a dividend investment. It has only been consistently paying dividends for 2 years, however, standard practice for reliable payers is to look for a 10-year minimum track record.
Compared to its peers, Tecnoglass generates a yield of 6.6%, which is high for Basic Materials stocks.
Next Steps:
Taking all the above into account, Tecnoglass is a complicated pick for dividend investors given that there are a couple of positive things about it as well as negative. 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. There are three fundamental factors you should further examine:
Future Outlook: What are well-informed industry analysts predicting for TGLS’s future growth? Take a look at our free research report of analyst consensus for TGLS’s outlook.
Valuation: What is TGLS 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 TGLS 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 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 editorial-team@simplywallst.com.
