Is Supply Network Limited (ASX:SNL) A Good Pick For Income Investors?

Dividends play a key role in compounding returns over time and can form a large part of our portfolio return. Supply Network Limited (ASX:SNL) has returned to shareholders over the past 10 years, an average dividend yield of 7.00% annually. Does Supply Network tick all the boxes of a great dividend stock? Below, I'll take you through my analysis. See our latest analysis for Supply Network

Here's how I find good dividend stocks

If you are a dividend investor, you should always assess these five key metrics:

• Is it paying an annual yield above 75% of dividend payers?
• Does it consistently pay out dividends without missing a payment of significantly cutting payout?
• Has the amount of dividend per share grown over the past?
• Is it able to pay the current rate of dividends from its earnings?
• Will it have the ability to keep paying its dividends going forward?

Does Supply Network pass our checks?

Supply Network has a trailing twelve-month payout ratio of 60.19%, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting a payout ratio of 58.53%, leading to a dividend yield of 3.47%. Reliablity is an important factor for dividend stocks, particularly for income investors who want a strong track record of payment and a positive outlook for future payout. Although SNL's per share payments have increased in the past 10 years, it has not been a completely smooth ride. Shareholders would have seen a few years of reduced payments in this time. Compared to its peers, Supply Network generates a yield of 3.32%, which is high for Retail Distributors stocks but still below the market's top dividend payers.

Next Steps:

With this in mind, I definitely rank Supply Network as a strong dividend stock, and makes it worth further research for anyone who likes steady income generation from their portfolio. 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. I've put together three pertinent aspects you should look at:

• 1. Valuation: What is SNL 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 SNL is currently mispriced by the market.
• 2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Supply Network’s board and the CEO’s back ground.
• 3. Other Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.

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Simply Wall St analyst Simply Wall St and Simply Wall St have no position in any of the companies mentioned. This article is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.