Dividends play a key role in compounding returns over time and can form a large part of our portfolio return. Historically, Huber+Suhner AG (VTX:HUBN) has paid dividends to shareholders, and these days it yields 1.6%. Should it have a place in your portfolio? Let’s take a look at Huber+Suhner in more detail.
5 checks you should do on a dividend stock
When assessing a stock as a potential addition to my dividend Portfolio, I look at these five areas:
- Is it paying an annual yield above 75% of dividend payers?
- Has it paid dividend every year without dramatically reducing payout in the past?
- Has dividend per share risen in the past couple of years?
- Does earnings amply cover its dividend payments?
- Will it have the ability to keep paying its dividends going forward?
How well does Huber+Suhner fit our criteria?
The current trailing twelve-month payout ratio for the stock is 43%, which means that the dividend is covered by earnings. In the near future, analysts are predicting a payout ratio of 47%, leading to a dividend yield of 2.2%. Moreover, EPS should increase to CHF3.14.
If you want to dive deeper into the sustainability of a certain payout ratio, you may wish to consider the cash flow of the business. Companies with strong cash flow can sustain a higher payout ratio, while companies with weaker cash flow generally cannot.
If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. Not only have dividend payouts from Huber+Suhner fallen over the past 10 years, it has also been highly volatile during this time, with drops of over 25% in some years. This means that dividend hunters should probably steer clear of the stock, at least for now until the track record improves.
Compared to its peers, Huber+Suhner produces a yield of 1.6%, which is on the low-side for Electrical stocks.
After digging a little deeper into Huber+Suhner’s yield, it’s easy to see why you should be cautious investing in the company just 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, I recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. There are three important aspects you should further research:
- Future Outlook: What are well-informed industry analysts predicting for HUBN’s future growth? Take a look at our free research report of analyst consensus for HUBN’s outlook.
- Valuation: What is HUBN 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 HUBN is currently mispriced by the market.
- 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 firstname.lastname@example.org.