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Zooming in on NYSE:WD’s 1.8% Dividend Yield

Dividends play an important role in compounding returns in the long run and end up forming a sizeable part of investment returns. Recently, Walker & Dunlop Inc (NYSE:WD) has started paying dividends to shareholders. Today it yields 1.8%. Let’s dig deeper into whether Walker & Dunlop should have a place in your portfolio.

Check out our latest analysis for Walker & Dunlop

5 questions I ask before picking 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 consistently paid a stable dividend without missing a payment or drastically cutting payout?

  • Has dividend per share risen in the past couple of years?

  • Can it afford to pay the current rate of dividends from its earnings?

  • Will it have the ability to keep paying its dividends going forward?

NYSE:WD Historical Dividend Yield August 28th 18
NYSE:WD Historical Dividend Yield August 28th 18

How well does Walker & Dunlop fit our criteria?

The current trailing twelve-month payout ratio for the stock is 7.1%, meaning the dividend is sufficiently covered by earnings. Furthermore, analysts have not forecasted a dividends per share for the future, which makes it hard to determine the yield shareholders should expect, and whether the current payout is sustainable, moving forward.

If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. The reality is that it is too early to consider Walker & Dunlop as a dividend investment. It has only been paying out dividend for the past one year. Generally, the rule of thumb for determining whether a stock is a reliable dividend payer is that it should be consistently paying dividends for the past 10 years or more. Clearly there’s a long road ahead before we can ascertain whether WD one as a stable dividend player.

In terms of its peers, Walker & Dunlop has a yield of 1.8%, which is on the low-side for Mortgage stocks.

Next Steps:

Now you know to keep in mind the reason why investors should be careful investing in Walker & Dunlop for the dividend. On the other hand, if you are not strictly just a dividend investor, the stock could still be offering some interesting investment opportunities. 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. I’ve put together three key factors you should look at:

  1. Future Outlook: What are well-informed industry analysts predicting for WD’s future growth? Take a look at our free research report of analyst consensus for WD’s outlook.

  2. Valuation: What is WD 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 WD is currently mispriced by the market.

  3. 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.

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