Should Income Investors Buy High Liner Foods Incorporated (TSE:HLF) Before Its Ex-Dividend?

By
Simply Wall St
Published
August 27, 2018
TSX:HLF
Source: Shutterstock

On the 15 September 2018, High Liner Foods Incorporated (TSE:HLF) will be paying shareholders an upcoming dividend amount of US$0.14 per share. However, investors must have bought the company's stock before 30 August 2018 in order to qualify for the payment. That means you have only 2 days left! Is this future income stream a compelling catalyst for dividend investors to think about the stock as an investment today? Let's take a look at High Liner Foods's most recent financial data to examine its dividend characteristics in more detail.

View our latest analysis for High Liner Foods

How I analyze a dividend stock

Whenever I am looking at a potential dividend stock investment, I always check these five metrics:

  • 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 it have the ability to keep paying its dividends going forward?
TSX:HLF Historical Dividend Yield August 27th 18
TSX:HLF Historical Dividend Yield August 27th 18

How does High Liner Foods fare?

The current trailing twelve-month payout ratio for the stock is 45.8%, meaning the dividend is sufficiently 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.

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. In the case of HLF it has increased its DPS from $0.11 to $0.58 in the past 10 years. During this period it has not missed a payment, as one would expect for a company increasing its dividend. This is an impressive feat, which makes HLF a true dividend rockstar.

Relative to peers, High Liner Foods produces a yield of 7.8%, which is high for Food stocks.

Next Steps:

Keeping in mind the dividend characteristics above, High Liner Foods is definitely worth considering for investors looking to build a dedicated income 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. Below, I've compiled three pertinent factors you should further examine:

  1. Valuation: What is HLF 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 HLF 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 High Liner Foods’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.

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 editorial-team@simplywallst.com.

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.

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