Should TEGNA Inc (NYSE:TGNA) Be Part Of Your Portfolio?
Dividends play a key role in compounding returns over time and can form a large part of our portfolio return. Historically, TEGNA Inc (NYSE:TGNA) has paid dividends to shareholders, and these days it yields 2.3%. Let’s dig deeper into whether TEGNA should have a place in your portfolio.
View our latest analysis for TEGNA
5 checks you should do on a dividend stock
If you are a dividend investor, you should always assess these five key metrics:
Is its annual yield among the top 25% of dividend-paying companies?
Has it consistently paid a stable dividend without missing a payment or drastically 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 does TEGNA fare?
The company currently pays out 12% of its earnings as a dividend, according to its trailing twelve-month data, which means that the dividend is covered by earnings. Going forward, analysts expect TGNA’s payout to increase to 16% of its earnings, which leads to a dividend yield of 2.3%. However, EPS is forecasted to fall to $1.51 in the upcoming year. Therefore, although payout is expected to increase, the fall in earnings may not equate to higher dividend income.
When thinking about whether a dividend is sustainable, another factor to consider is the cash flow. A company with strong cash flow, relative to earnings, can sometimes sustain a high pay out ratio.
If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. Dividend payments from TEGNA have been volatile in the past 10 years, with some years experiencing significant drops of over 25%. These characteristics do not bode well for income investors seeking reliable stream of dividends.
Relative to peers, TEGNA produces a yield of 2.3%, which is high for Media stocks but still below the market’s top dividend payers.
Next Steps:
If you are building an income portfolio, then TEGNA is a complicated choice since it has some positive aspects as well as negative ones. 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 recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. I’ve put together three important aspects you should further examine:
Future Outlook: What are well-informed industry analysts predicting for TGNA’s future growth? Take a look at our free research report of analyst consensus for TGNA’s outlook.
Valuation: What is TGNA 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 TGNA 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.
