Valvoline Inc (NYSE:VVV): 4 Days To Buy Before The Ex-Dividend Date
On the 17 December 2018, Valvoline Inc (NYSE:VVV) will be paying shareholders an upcoming dividend amount of US$0.11 per share. However, investors must have bought the company’s stock before 29 November 2018 in order to qualify for the payment. That means you have only 4 days left! Is this future income a persuasive enough catalyst for investors to think about Valvoline as an investment today? Below, I’m going to look at the latest data and analyze the stock and its dividend property in further detail.
Check out our latest analysis for Valvoline
5 questions I ask before picking a dividend stock
Whenever I am looking at a potential dividend stock investment, I always check these five metrics:
Does it pay an annual yield higher than 75% of dividend payers?
Has it paid dividend every year without dramatically reducing payout in the past?
Has it increased its dividend per share amount over the past?
Does earnings amply cover its dividend payments?
Will it have the ability to keep paying its dividends going forward?
How does Valvoline fare?
The company currently pays out 35% of its earnings as a dividend, according to its trailing twelve-month data, which means that the dividend is covered by earnings. However, going forward, analysts expect VVV’s payout to fall to 23% of its earnings, which leads to a dividend yield of 1.7%. However, EPS should increase to $1.43, 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 company with strong cash flow, relative to earnings, can sometimes sustain a high pay out ratio.
Reliablity is an important factor for dividend stocks, particularly for income investors who want a strong track record of payment and a positive outlook for future payout. The reality is that it is too early to consider Valvoline 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.
Relative to peers, Valvoline has a yield of 2.1%, which is on the low-side for Chemicals stocks.
Next Steps:
If Valvoline is in your portfolio for cash-generating reasons, there may be better alternatives out there. 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 important aspects you should further examine:
Future Outlook: What are well-informed industry analysts predicting for VVV’s future growth? Take a look at our free research report of analyst consensus for VVV’s outlook.
Valuation: What is VVV 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 VVV 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.
