Dividends can be underrated but they form a large part of investment returns, playing an important role in compounding returns in the long run. Historically, Comet Holding AG (VTX:COTN) has been paying a dividend to shareholders. Today it yields 1.8%. Should it have a place in your portfolio? Let’s take a look at Comet Holding in more detail.
View our latest analysis for Comet Holding
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:
- Does it pay an annual yield higher than 75% 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 is able to pay the current rate of dividends from its earnings?
- Based on future earnings growth, will it be able to continue to payout dividend at the current rate?
How well does Comet Holding fit our criteria?
The current trailing twelve-month payout ratio for the stock is 37%, which means that the dividend is covered by earnings. In the near future, analysts are predicting a payout ratio of 35% which, assuming the share price stays the same, leads to a dividend yield of around 1.9%. In addition to this, EPS is forecasted to fall to CHF3.12 in the upcoming year.
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. Cash flow is important because companies with strong cash flow can usually sustain higher payout ratios.
If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. Whilst its per-share payments have increased during the past 10 years, there has been some hiccups. Shareholders would have seen a few years of reduced payments in this time.
Relative to peers, Comet Holding produces a yield of 1.8%, which is on the low-side for Electronic stocks.
Next Steps:
If Comet Holding is in your portfolio for cash-generating reasons, there may be better alternatives out there. 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, 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. I’ve put together three essential factors you should further research:
- Future Outlook: What are well-informed industry analysts predicting for COTN’s future growth? Take a look at our free research report of analyst consensus for COTN’s outlook.
- Valuation: What is COTN 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 COTN 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 editorial-team@simplywallst.com.