Over the past 10 years GAM Holding AG (VTX:GAM) has returned an average of 4.00% per year from dividend payouts. The company is currently worth CHF1.78b, and now yields roughly 5.72%. Should it have a place in your portfolio? Let’s take a look at GAM Holding in more detail.
How I analyze a dividend stock
If you are a dividend investor, you should always assess these five key metrics:
- Is it the top 25% annual dividend yield payer?
- Does it consistently pay out dividends without missing a payment of significantly cutting payout?
- Has dividend per share risen in the past couple of years?
- Is is able 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?
How well does GAM Holding fit our criteria?
The current trailing twelve-month payout ratio for the stock is 82.83%, which means that the dividend is covered by earnings. However, going forward, analysts expect GAM’s payout to fall to 61.65% of its earnings, which leads to a dividend yield of around 6.64%. However, EPS should increase to CHF1.07, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment.
If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. Whilst its per-share payments have increased during the past 10 years, there has been some hiccups. Investors have seen reductions in the dividend per share in the past, although, it has picked up again.
Relative to peers, GAM Holding produces a yield of 5.72%, which is high for Capital Markets stocks.
With these dividend metrics in mind, I definitely rank GAM Holding as a strong income stock, and is worth further research for anyone who considers dividends an important part of their portfolio strategy. Given that this is purely a dividend analysis, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. Below, I’ve compiled three fundamental aspects you should look at:
- Future Outlook: What are well-informed industry analysts predicting for GAM’s future growth? Take a look at our free research report of analyst consensus for GAM’s outlook.
- Valuation: What is GAM 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 GAM is currently mispriced by the market.
- Other 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 firstname.lastname@example.org.