On the 02 January 2019, Fuller Smith & Turner PLC (LON:FSTA) will be paying shareholders an upcoming dividend amount of UK£0.078 per share. However, investors must have bought the company’s stock before 06 December 2018 in order to qualify for the payment. That means you have only 4 days left! Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I take a deeper dive into Fuller Smith & Turner’s latest financial data to analyse its dividend attributes.
5 checks you should do on a dividend stock
Whenever I am looking at a potential dividend stock investment, I always check these five metrics:
- Does it pay an annual yield higher than 75% of dividend payers?
- Does it consistently pay out dividends without missing a payment of significantly cutting payout?
- Has it increased its dividend per share amount over the past?
- Does earnings amply cover its dividend payments?
- Will it be able to continue to payout at the current rate in the future?
Does Fuller Smith & Turner pass our checks?
Fuller Smith & Turner has a trailing twelve-month payout ratio of 33%, which means that the dividend is covered by earnings. Going forward, analysts expect FSTA’s payout to remain around the same level at 32% of its earnings, which leads to a dividend yield of around 2.3%. Furthermore, EPS should increase to £0.66.
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. A business with strong cash flow can sustain a higher divided payout ratio than a company with weak cash flow.
If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. In the case of FSTA it has increased its DPS from £0.098 to £0.20 in the past 10 years. It has also been paying out dividend consistently during this time, as you’d expect for a company increasing its dividend levels. These are all positive signs of a great, reliable dividend stock.
Relative to peers, Fuller Smith & Turner has a yield of 2.1%, which is on the low-side for Hospitality stocks.
With these dividend metrics in mind, I definitely rank Fuller Smith & Turner as a strong income stock, and is worth further research for anyone who considers dividends an important part of their portfolio strategy. 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 important aspects you should further examine:
- Future Outlook: What are well-informed industry analysts predicting for FSTA’s future growth? Take a look at our free research report of analyst consensus for FSTA’s outlook.
- Valuation: What is FSTA 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 FSTA 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.
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.