Have you been keeping an eye on Central Securities Corp’s (AMEX:CET) upcoming dividend of $0.25 per share payable on the 26 June 2018? Then you only have 3 days left before the stock starts trading ex-dividend on the 08 June 2018. What does this mean for current shareholders and potential investors? Below, I will explain how holding Central Securities can impact your portfolio income stream, by analysing the stock’s most recent financial data and dividend attributes. See our latest analysis for Central Securities
5 checks you should do on a dividend stock
When assessing a stock as a potential addition to my dividend Portfolio, I look at these five areas:
- Is their annual yield among the top 25% of dividend payers?
- 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?
- Is its earnings sufficient to payout dividend at the current rate?
- Will it be able to continue to payout at the current rate in the future?
How well does Central Securities fit our criteria?Central Securities has a trailing twelve-month payout ratio of 14.86%, which means that the dividend is covered by earnings. Furthermore, analysts have not forecasted a dividends per share for the future, which makes it hard to determine the yield shareholders should expect, and whether the current payout is sustainable, moving forward. If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. Not only have dividend payouts from Central Securities fallen over the past 10 years, it has also been highly volatile during this time, with drops of over 25% in some years. This means that dividend hunters should probably steer clear of the stock, at least for now until the track record improves. In terms of its peers, Central Securities has a yield of 3.77%, which is high for Capital Markets stocks but still below the market’s top dividend payers.
Now you know to keep in mind the reason why investors should be careful investing in Central Securities 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, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. There are three key factors you should further examine:
- Valuation: What is CET 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 CET is currently mispriced by the market.
- Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Central Securities’s board and the CEO’s back ground.
- Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.