Dividends play a key role in compounding returns over time and can form a large part of our portfolio return. In the past 10 years Reitmans (Canada) Limited (TSE:RET.A) has returned an average of 5.00% per year to investors in the form of dividend payouts. Let’s dig deeper into whether Reitmans (Canada) should have a place in your portfolio. Check out our latest analysis for Reitmans (Canada)
5 checks you should use to assess a dividend stock
When assessing a stock as a potential addition to my dividend Portfolio, I look at these five areas:
- 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 dividend per share amount increased over the past?
- Is is able to pay the current rate of dividends from its earnings?
- Will it have the ability to keep paying its dividends going forward?
Does Reitmans (Canada) pass our checks?
The current payout ratio for RET.A is negative, meaning that the company is not yet profitable and is paying dividend by dipping into its retained earnings.
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. Dividend payments from Reitmans (Canada) have been volatile in the past 10 years, with some years experiencing significant drops of over 25%. These characteristics do not bode well for income investors seeking reliable stream of dividends.Compared to its peers, Reitmans (Canada) produces a yield of 4.78%, which is high for Specialty Retail stocks but still below the market’s top dividend payers.
After digging a little deeper into Reitmans (Canada)’s yield, it’s easy to see why you should be cautious investing in the company just for the dividend. But if you are not exclusively a dividend investor, the stock could still be an interesting investment opportunity. 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 relevant factors you should further research:
- Valuation: What is RET.A 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 RET.A is currently mispriced by the market.
- Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Reitmans (Canada)’s board and the CEO’s back ground.
- Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.