Should Income Investors Buy Intertape Polymer Group Inc (TSE:ITP) Before Its Ex-Dividend?

By
Simply Wall St
Published
June 08, 2018
TSX:ITP
Source: Shutterstock

If you are interested in cashing in on Intertape Polymer Group Inc's (TSE:ITP) upcoming dividend of $0.14 per share, you only have 5 days left to buy the shares before its ex-dividend date, 14 June 2018, in time for dividends payable on the 29 June 2018. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I examine Intertape Polymer Group's latest financial data to analyse its dividend characteristics. View out our latest analysis for Intertape Polymer Group

5 checks you should do on 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 its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?
  • Has it increased its dividend per share amount over the past?
  • Is its earnings sufficient to payout dividend at the current rate?
  • Based on future earnings growth, will it be able to continue to payout dividend at the current rate?

TSX:ITP Historical Dividend Yield June 8th 18
TSX:ITP Historical Dividend Yield June 8th 18

How well does Intertape Polymer Group fit our criteria?

The current trailing twelve-month payout ratio for the stock is 53.18%, 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. If dividend is a key criteria in your investment consideration, then you need to make sure the dividend stock you're eyeing out is reliable in its payments. The reality is that it is too early to consider Intertape Polymer Group as a dividend investment. It has only been consistently paying dividends for 6 years, however, standard practice for reliable payers is to look for a 10-year minimum track record. In terms of its peers, Intertape Polymer Group has a yield of 3.75%, which is high for Packaging stocks but still below the market's top dividend payers.

Next Steps:

Now you know to keep in mind the reason why investors should be careful investing in Intertape Polymer Group 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, 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. There are three essential aspects you should look at:

  1. Valuation: What is ITP 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 ITP 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 Intertape Polymer Group’s board and the CEO’s back ground.
  3. Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.

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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