Zooming in on NYSE:WGO’s 1.2% Dividend Yield
A sizeable part of portfolio returns can be produced by dividend stocks due to their contribution to compounding returns in the long run. Historically, Winnebago Industries Inc (NYSE:WGO) has been paying a dividend to shareholders. Today it yields 1.2%. Does Winnebago Industries tick all the boxes of a great dividend stock? Below, I’ll take you through my analysis.
Check out our latest analysis for Winnebago Industries
5 checks you should use to assess a dividend stock
When researching a dividend stock, I always follow the following screening criteria:
Is it the top 25% annual dividend yield payer?
Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?
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?
Does Winnebago Industries pass our checks?
Winnebago Industries has a trailing twelve-month payout ratio of 13%, which means that the dividend is covered by earnings. In the near future, analysts are predicting lower payout ratio of 9.0%, leading to a dividend yield of 1.2%. However, EPS should increase to $3.77, 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.
If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. Not only have dividend payouts from Winnebago Industries fallen over the past 10 years, it has also been highly volatile during this time, with drops of over 25% in some years. These characteristics do not bode well for income investors seeking reliable stream of dividends.
Relative to peers, Winnebago Industries has a yield of 1.2%, which is on the low-side for Auto stocks.
Next Steps:
After digging a little deeper into Winnebago Industries’s yield, it’s easy to see why you should be cautious investing in the company just 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. There are three important factors you should further research:
Future Outlook: What are well-informed industry analysts predicting for WGO’s future growth? Take a look at our free research report of analyst consensus for WGO’s outlook.
Valuation: What is WGO 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 WGO 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.
