Want to help shape the future of investing tools? Participate in a short research study and receive a subscription valued at $60.
Shares of Thai Beverage Public Company Limited (SGX:Y92) will begin trading ex-dividend in 3 days. To qualify for the dividend check of ฿0.24 per share, investors must have owned the shares prior to 07 February 2019, which is the last day the company’s management will finalize their list of shareholders to which they will send dividend payments. Is this future income stream a compelling catalyst for dividend investors to think about the stock as an investment today? Let’s take a look at Thai Beverage’s most recent financial data to examine its dividend characteristics in more detail.
5 questions I ask before picking a dividend stock
When researching a dividend stock, I always follow the following screening criteria:
- Is it paying an annual yield above 75% of dividend payers?
- Has it paid dividend every year without dramatically reducing payout in the past?
- Has dividend per share risen in the past couple of years?
- Does earnings amply cover its dividend payments?
- Based on future earnings growth, will it be able to continue to payout dividend at the current rate?
How well does Thai Beverage fit our criteria?
The current trailing twelve-month payout ratio for the stock is 53%, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting a payout ratio of 55% which, assuming the share price stays the same, leads to a dividend yield of 3.0%. In addition to this, EPS should increase to ฿0.91.
When assessing the forecast sustainability of a dividend it is also worth considering the cash flow of the business. A business with strong cash flow can sustain a higher divided payout ratio than a company with weak cash flow.
If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. Although Y92’s per share payments have increased in the past 10 years, it has not been a completely smooth ride. Shareholders would have seen a few years of reduced payments in this time.
Compared to its peers, Thai Beverage has a yield of 2.2%, which is on the low-side for Beverage stocks.
Taking all the above into account, Thai Beverage 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. Below, I’ve compiled three key factors you should look at:
- Future Outlook: What are well-informed industry analysts predicting for Y92’s future growth? Take a look at our free research report of analyst consensus for Y92’s outlook.
- Valuation: What is Y92 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 Y92 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 firstname.lastname@example.org.