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, Laurent-Perrier SA (EPA:LPE) has paid dividends to shareholders, and these days it yields 1.1%. Should it have a place in your portfolio? Let’s take a look at Laurent-Perrier in more detail.
5 questions I ask before picking a dividend stock
If you are a dividend investor, you should always assess these five key metrics:
- Is it the top 25% annual dividend yield payer?
- Has it consistently paid a stable dividend without missing a payment or drastically cutting payout?
- Has dividend per share amount increased over the past?
- 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 Laurent-Perrier pass our checks?
Laurent-Perrier has a trailing twelve-month payout ratio of 30%, which means that the dividend is covered by earnings. In the near future, analysts are predicting lower payout ratio of 27%, leading to a dividend yield of 1.3%. However, EPS should increase to €3.9, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment.
When thinking about whether a dividend is sustainable, another factor to consider is the cash flow. Companies with strong cash flow can sustain a higher payout ratio, while companies with weaker cash flow generally cannot.
If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. Dividend payments from Laurent-Perrier have been volatile in the past 10 years, with some years experiencing significant drops of over 25%. 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, Laurent-Perrier produces a yield of 1.1%, which is on the low-side for Beverage stocks.
Now you know to keep in mind the reason why investors should be careful investing in Laurent-Perrier 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 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 essential aspects you should look at:
- Future Outlook: What are well-informed industry analysts predicting for LPE’s future growth? Take a look at our free research report of analyst consensus for LPE’s outlook.
- Valuation: What is LPE 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 LPE 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 email@example.com.