Valener Inc (TSE:VNR): 4 Days To Buy Before The Ex-Dividend Date
Investors who want to cash in on Valener Inc’s (TSE:VNR) upcoming dividend of CA$0.30 per share have only 4 days left to buy the shares before its ex-dividend date, 28 March 2019, in time for dividends payable on the 15 April 2019. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I take a deeper dive into Valener’s latest financial data to analyse its dividend attributes.
Check out our latest analysis for Valener
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5 checks you should use to assess a dividend stock
When researching a dividend stock, I always follow the following screening criteria:
Is their annual yield among the top 25% 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?
Will the company be able to keep paying dividend based on the future earnings growth?
How well does Valener fit our criteria?
Valener has a trailing twelve-month payout ratio of 76%, which means that the dividend is covered by earnings. Going forward, analysts expect VNR’s payout to increase to 83% of its earnings. Assuming a constant share price, this equates to a dividend yield of around 5.4%. However, EPS is forecasted to fall to CA$1.5 in the upcoming year. Therefore, although payout is expected to increase, the fall in earnings may not equate to higher dividend income.
When assessing the forecast sustainability of a dividend it is also worth considering the cash flow of the business. A company with strong cash flow, relative to earnings, can sometimes sustain a high pay out ratio.
If dividend is a key criteria in your investment consideration, then you need to make sure the dividend stock you’re eyeing out is reliable in its payments. The reality is that it is too early to consider Valener as a dividend investment. It has only been consistently paying dividends for 8 years, however, standard practice for reliable payers is to look for a 10-year minimum track record.
In terms of its peers, Valener generates a yield of 5.1%, which is on the low-side for Gas Utilities stocks.
Next Steps:
Taking all the above into account, Valener 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, you should always research extensively before deciding whether or not a stock is an appropriate investment for you. I always recommend analysing the company’s fundamentals and underlying business before making an investment decision. There are three pertinent factors you should further examine:
Future Outlook: What are well-informed industry analysts predicting for VNR’s future growth? Take a look at our free research report of analyst consensus for VNR’s outlook.
Valuation: What is VNR 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 VNR 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.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
