Dividends play a key role in compounding returns over time and can form a large part of our portfolio return. GEA Group Aktiengesellschaft (FRA:G1A) has returned to shareholders over the past 10 years, an average dividend yield of 2.00% annually. Let’s dig deeper into whether GEA Group should have a place in your portfolio. View out our latest analysis for GEA Group
5 checks you should do on a dividend stock
If you are a dividend investor, you should always assess these five key metrics:
- Is their annual yield among the top 25% 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?
- Is its earnings sufficient to payout dividend at the current rate?
- Will the company be able to keep paying dividend based on the future earnings growth?
Does GEA Group pass our checks?
GEA Group has a trailing twelve-month payout ratio of 82.03%, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting lower payout ratio of 43.40%, leading to a dividend yield of 2.93%. However, EPS should increase to €1.53, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment.
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. Whilst its per-share payments have increased during the past 10 years, there has been some hiccups. Investors have seen reductions in the dividend per share in the past, although, it has picked up again.Relative to peers, GEA Group has a yield of 2.67%, which is high for Machinery stocks but still below the market’s top dividend payers.
Keeping in mind the dividend characteristics above, GEA Group is definitely worth considering for investors looking to build a dedicated income portfolio. 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. Below, I’ve compiled three essential factors you should further examine:
- Future Outlook: What are well-informed industry analysts predicting for G1A’s future growth? Take a look at our free research report of analyst consensus for G1A’s outlook.
- Valuation: What is G1A 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 G1A is currently mispriced by the market.
- Other Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.