A sizeable part of portfolio returns can be produced by dividend stocks due to their contribution to compounding returns in the long run. In the past 2 years Gateway Lifestyle Group (ASX:GTY) has returned an average of 5.00% per year to investors in the form of dividend payouts. Does Gateway Lifestyle Group tick all the boxes of a great dividend stock? Below, I’ll take you through my analysis. See our latest analysis for Gateway Lifestyle Group
Here’s how I find good dividend stocks
When researching a dividend stock, I always follow the following screening criteria:
- Is their annual yield among the top 25% of dividend payers?
- Has it consistently paid a stable dividend without missing a payment or drastically cutting payout?
- Has the amount of dividend per share grown over the past?
- Does earnings amply cover its dividend payments?
- Will the company be able to keep paying dividend based on the future earnings growth?
How well does Gateway Lifestyle Group fit our criteria?Gateway Lifestyle Group has a trailing twelve-month payout ratio of 46.53%, which means that the dividend is covered by earnings. In the near future, analysts are predicting a higher payout ratio of 69.85%, leading to a dividend yield of around 5.75%. However, EPS is forecasted to fall to A$0.15 in the upcoming year. Therefore, although payout is expected to increase, the fall in earnings may not equate to higher dividend income. If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. Unfortunately, it is really too early to view Gateway Lifestyle Group as a dividend investment. It has only been consistently paying dividends for 2 years, however, standard practice for reliable payers is to look for a 10-year minimum track record. Compared to its peers, Gateway Lifestyle Group has a yield of 5.47%, which is high for Real Estate stocks.
With these dividend metrics in mind, I definitely rank Gateway Lifestyle Group 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, you should always research extensively before deciding whether or not a stock is an appropriate investment for you. I always recommend analysing the company’s fundamentals and underlying business before making an investment decision. I’ve put together three fundamental factors you should further examine:
- Future Outlook: What are well-informed industry analysts predicting for GTY’s future growth? Take a look at our free research report of analyst consensus for GTY’s outlook.
- Valuation: What is GTY 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 GTY 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.