Important news for shareholders and potential investors in Countplus Limited (ASX:CUP): The dividend payment of AU$0.01 per share will be distributed to shareholders on 17 April 2019, and the stock will begin trading ex-dividend at an earlier date, 21 March 2019. What does this mean for current shareholders and potential investors? Below, I will explain how holding Countplus can impact your portfolio income stream, by analysing the stock’s most recent financial data and dividend attributes.
Here’s how I find good dividend stocks
When researching a dividend stock, I always follow the following screening criteria:
- Is its annual yield among the top 25% of dividend-paying companies?
- Has it paid dividend every year without dramatically reducing payout in the past?
- Has it increased its dividend per share amount over the past?
- Is is able to pay the current rate of dividends from its earnings?
- Will it be able to continue to payout at the current rate in the future?
Does Countplus pass our checks?
Countplus has a trailing twelve-month payout ratio of 39%, which means that the dividend is covered by earnings. In the near future, analysts are predicting a higher payout ratio of 55% which, assuming the share price stays the same, leads to a dividend yield of 5.3%. Furthermore, EPS should increase to A$0.052. The higher payout forecasted, along with higher earnings, should lead to greater dividend income for investors moving forward.
If you want to dive deeper into the sustainability of a certain payout ratio, you may wish to consider the cash flow of the business. A company with strong cash flow, relative to earnings, can sometimes sustain a high pay out ratio.
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 Countplus as a dividend investment. It has only been consistently paying dividends for 8 years, however, standard practice for reliable payers is to look for a 10-year minimum track record.
In terms of its peers, Countplus has a yield of 3.6%, which is high for Professional Services stocks but still below the market’s top dividend payers.
Whilst there are few things you may like about Countplus from a dividend stock perspective, the truth is that overall it probably is not the best choice for a dividend investor. However, if you are not strictly just a dividend investor, the stock could still offer some interesting investment opportunities. Given that this is purely a dividend analysis, I recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. There are three relevant aspects you should look at:
- Future Outlook: What are well-informed industry analysts predicting for CUP’s future growth? Take a look at our free research report of analyst consensus for CUP’s outlook.
- Valuation: What is CUP 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 CUP is currently mispriced by the market.
- Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.