Over the past 10 years Dunelm Group plc (LSE:DNLM) has returned an average of 3.00% per year from dividend payouts. The stock currently pays out a dividend yield of 3.95%, and has a market cap of UK£1.28B. Let’s dig deeper into whether Dunelm Group should have a place in your portfolio. Check out our latest analysis for Dunelm Group
Here’s how I find good dividend stocks
When assessing a stock as a potential addition to my dividend Portfolio, I look at these five areas:
- Is its annual yield among the top 25% of dividend payers?
- Does it consistently pay out dividends without missing a payment or significantly cutting payout?
- Has it increased its dividend per share amount over the past?
- Is its earnings sufficient to payout dividend at the current rate?
- Will it have the ability to keep paying its dividends going forward?
How well does Dunelm Group fit our criteria?
The current trailing twelve-month payout ratio for the stock is 71.71%, which means that the dividend is covered by earnings. In the near future, analysts are predicting lower payout ratio of 54.86%, leading to a dividend yield of around 4.61%. However, EPS should increase to £0.47, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment. If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. DNLM has increased its DPS from £0.04 to £0.25 in the past 10 years. During this period it has not missed a payment, as one would expect for a company increasing its dividend. These are all positive signs of a great, reliable dividend stock. In terms of its peers, Dunelm Group has a yield of 3.95%, which is high for Specialty Retail stocks but still below the market’s top dividend payers.
With this in mind, I definitely rank Dunelm Group as a strong dividend stock, and makes it worth further research for anyone who likes steady income generation from their portfolio. Given that this is purely a dividend analysis, I recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. There are three fundamental aspects you should look at:
- 1. Future Outlook: What are well-informed industry analysts predicting for DNLM’s future growth? Take a look at our free research report of analyst consensus for DNLM’s outlook.
- 2. Valuation: What is DNLM 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 DNLM is currently mispriced by the market.
- 3. 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.