Should income investors buy Paragon Care Limited (ASX:PGC) before its ex-dividend?

Investors who want to cash in on Paragon Care’s (ASX:PGC) upcoming dividend of $0.02 per share have only 8 days left to buy the shares before its ex-dividend date, Thu 07 Sep 2017, in time for dividends payable on the Fri 06 Oct 2017. Is this future income stream a compelling catalyst for dividend investors to think about PGC as an investment today? Let’s take a look at PGC’s most recent financial data to examine its dividend characteristics 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.

See our latest analysis for PGC

What should you know before buying Paragon Care (PGC) for its dividend

Paragon Care’s payout ratio is the first thing I want to look at to assess the strength of it’s dividend yield. Handing Money Transparent

Payout ratio is a measure of how much of a company’s earnings are paid out as dividends to its shareholders. So a payout ratio of 50% means that shareholders receive 50c for every $1 the company earns. Likewise a payout ratio of 150% means the company is paying out more than the profit it earns, usually funded from its cash reserves or debt.

The company currently pays out 35% of its earnings as a dividend, which means that the dividend is covered by earnings. Looking forward, analysts expect dividends per share to be around $0.061 and EPS to increase to $0.1. This means they should be able to continue the dividend payout with an expected future payout ratio of 63%. View our latest analysis for Paragon Care

In addition to the payout ratio, the payout consistency is a significant consideration when assessing the quality of PGC’s dividend.

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 Paragon Care as a dividend investment. They have only been consistently paying dividends for 5 years, however, standard practice for reliable payers is to look for a 10-year minimum track record.
ASX:PGC Historical Dividend Yield Aug 30th 17
ASX:PGC Historical Dividend Yield Aug 30th 17

Currently the company yields 3.28%, which is high for a healthcare stock but still below the market’s top dividend payers.

What this means for you:

Are you a shareholder? If PGC is in your portfolio for cash-generating reasons, there may be better alternatives out there.Depending on your portfolio composition, it may be worth exploring other dividend stocks to increase diversification, or even look at high-growth stocks to complement your steady income stocks.

Are you a potential investor? Taking all the above into account, Paragon Care is a complicated pick for dividend investors given that there are a couple of positive things about it as well as negative.But if you are not exclusively a dividend investor, PGC could still be an interesting investment opportunity.As always, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment.

If you’re still interest in the company, I recommend you take a look at our

latest FREE analysis to explore what investment opportunities Paragon Care may offer. If you are looking for great dividend payers I recommend you also take a look at our list of Dividend Rock Stars.