On the Fri 30 Jun 2017, Intertape Polymer Group (TSX:ITP) will pay shareholders of record a dividend of $0.14 per share, but investors must have settled ownership of the company’s stock by the Tue 13 Jun 2017, in order to qualify. That means you have only 3 days left. Should ITP be on dividend investor’s list? I’m going to look at the latest data and analyze this stock in more detail.
What is the ex-dividend date?
If you purchase a stock on or after its ex-dividend date, you will not receive the next dividend payment. Instead, the seller gets the dividend. If you purchase before the ex-dividend date, you get the dividend.
How does Intertape Polymer Group (ITP) fare as a dividend stock?
When analysing how sound a company’s yield is, I like to first look at the their payout ratio.
Payout ratio is a measure of what portion of a company’s earnings are paid out to shareholders as a dividend. So a payout ratio of 50% would mean for every $1 earnt they pay 50c as a dividend. Likewise a payout ratio of 150% means a company cannot afford to pay their dividend with earnings and will need to dive into their cash reserves or worse debt to pay the remaining part.
The current payout ratio for the stock is 58%, which means that the dividend is covered by earnings. Looking forward 3 years the analysts expect the dividends per share to be around $0.502 and EPS to increase to $1.14. This means they should be able to continue the dividend payout with an estimated future payout ratio of 44%.
In addition to the payout ratio, the payout consistency is a significant consideration when assessing the quality of ITP’s dividend.
If there’s one type of stock you want to be reliable, it’s dividend stocks. It is really too early to view Intertape Polymer Group as a dividend investment. They have only been consistently paying for 5 years and standard practice for reliable payers is to look for 10+ years track record. }
Intertape Polymer Group yields 3.22%, which is high for a materials stock.
The Take Away
Whilst there are few things you can like about Intertape Polymer Group from a dividend stock perspective, the truth is that overall it probably is not the best choice for a dividend investor.On the other hand, if you are not strictly just a dividend investor, ITP could still be offering some interesting investment opportunities.
See our latest analysis (it’s FREE) to explore what investment opportunities Intertape Polymer Group may offer. If you are looking for great dividend payers I recommend you also take a look at our list of Dividend Rock Stars.