There is a lot to be liked about Bendigo and Adelaide Bank Limited (ASX:BEN) as an income stock, over the past 10 years it has returned an average of 6.00% per year. The stock currently pays out a dividend yield of 6.55%, and has a market cap of AU$5.20b. Should it have a place in your portfolio? Let’s take a look at Bendigo and Adelaide Bank in more detail. Check out our latest analysis for Bendigo and Adelaide Bank
Here’s how I find good dividend stocks
When researching a dividend stock, I always follow the following screening criteria:
- Does it pay an annual yield higher than 75% of dividend payers?
- Does it consistently pay out dividends without missing a payment of significantly cutting payout?
- Has the amount of dividend per share grown over the past?
- Can it afford to pay the current rate of dividends from its earnings?
- Will the company be able to keep paying dividend based on the future earnings growth?
How does Bendigo and Adelaide Bank fare?
The current trailing twelve-month payout ratio for the stock is 73.10%, meaning the dividend is sufficiently covered by earnings. Going forward, analysts expect BEN’s payout to increase to 84.48% of its earnings, which leads to a dividend yield of 6.64%. However, EPS is forecasted to fall to A$0.86 in the upcoming year. Therefore, although payout is expected to increase, the fall in earnings may not equate to higher dividend income.
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. Whilst its per-share payments have increased during the past 10 years, there has been some hiccups. Investors have seen reductions in the dividend per share in the past, although, it has picked up again.
Compared to its peers, Bendigo and Adelaide Bank produces a yield of 6.55%, which is high for Banks stocks.
Considering the dividend attributes we analyzed above, Bendigo and Adelaide Bank is definitely worth keeping an eye on for someone looking to build a dedicated income portfolio. 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 essential aspects you should look at:
- Future Outlook: What are well-informed industry analysts predicting for BEN’s future growth? Take a look at our free research report of analyst consensus for BEN’s outlook.
- Valuation: What is BEN 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 BEN 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.
To help readers see pass 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.