Attention dividend hunters! VBG Group AB (publ) (STO:VBG B) will be distributing its dividend of kr4.50 per share on the 02 May 2019, and will start trading ex-dividend in 2 days time on the 25 April 2019. Is this future income a persuasive enough catalyst for investors to think about VBG Group 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.
5 checks you should use to assess a dividend stock
When researching a dividend stock, I always follow the following screening criteria:
- Does it pay an annual yield higher than 75% of dividend payers?
- Has it consistently paid a stable dividend without missing a payment or drastically cutting payout?
- Has dividend per share amount increased over the past?
- 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?
Does VBG Group pass our checks?
The current trailing twelve-month payout ratio for the stock is 32%, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting a payout ratio of 31% which, assuming the share price stays the same, leads to a dividend yield of around 3.1%. Furthermore, EPS should increase to SEK12.25.
If you want to dive deeper into the sustainability of a certain payout ratio, you may wish to consider the cash flow of the business. A company with strong cash flow, relative to earnings, can sometimes sustain a high pay out ratio.
If there is one thing that you want to be reliable in your life, it's dividend stocks and their constant income stream. Although VBG B's per share payments have increased in the past 10 years, it has not been a completely smooth ride. Investors have seen reductions in the dividend per share in the past, although, it has picked up again.
Compared to its peers, VBG Group has a yield of 2.4%, which is on the low-side for Machinery stocks.
Keeping in mind the dividend characteristics above, VBG Group is definitely worth considering for investors looking to build a dedicated income portfolio. 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 essential factors you should further research:
- Future Outlook: What are well-informed industry analysts predicting for VBG B’s future growth? Take a look at our free research report of analyst consensus for VBG B’s outlook.
- Valuation: What is VBG B 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 VBG B is currently mispriced by the market.
- Other 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 firstname.lastname@example.org. 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.