If you are interested in cashing in on Superior Plus’s (TSX:SPB) upcoming dividend of $0.06 you have only 7 days before the so called ex-dividend date on the Tue 29 Aug 2017. The dividend is payable on Fri 15 Sep 2017. But is this actually an interesting opportunity for dividend investors? Let’s look into that.
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.
Is Superior Plus (SPB) a good pick for a dividend investor?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% means that the shareholders recieve 50c for every $1 the company earns. Likewise a payout ratio of 150% means the company is paying out more as a dividend than it earns, usually this is paid out of debt or cash.
The current payout ratio for the stock is 41%, which means that the dividend is covered by earnings. In 3 years time the analysts are predicting dividends per share to be around $0.492 and EPS to decrease to $0.57. This means they should be able to continue the dividend payout with an expected future payout ratio of 86%.See our latest analysis for SPB
On top of Superior Plus’s payout ratio, investors should also look at the company’s track-record of dividend payments over the years.
If there is one thing that you want to be reliable, it is dividend stocks. Dividend payments from Superior Plus have dropped in the past 10 years, and these drops were not gradual, with some years experiencing drops of over 25%.These characteristics should have shareholders concerned and potential investors looking at alternative opportunities.
Superior Plus yields 6.32%, which is high for a utilities stock.
Whilst there are few things you can like about Superior Plus from a dividend stock perspective, the truth is that overall it probably is not the best choice for a dividend investor.But if you are not exclusively a dividend investor, SPB could still be an interesting investment opportunity.
See our latest analysis (it’s FREE) to explore what investment opportunities Superior Plus may offer. If you are looking for great dividend payers I recommend you also take a look at our list of Dividend Rock Stars.