A large part of investment returns can be generated by dividend-paying stock given their role in compounding returns over time. Historically, COFIDE - Gruppo De Benedetti SpA (BIT:COF) has been paying a dividend to shareholders. Today it yields 3.2%. Should it have a place in your portfolio? Let's take a look at COFIDE - Gruppo De Benedetti in more detail.
View our latest analysis for COFIDE - Gruppo De Benedetti
5 questions I ask before picking a dividend stock
When researching a dividend stock, I always follow the following screening criteria:
- Is its annual yield among the top 25% of dividend-paying companies?
- Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?
- Has the amount of dividend per share grown over the past?
- Is its earnings sufficient to payout dividend at the current rate?
- Will it be able to continue to payout at the current rate in the future?
How does COFIDE - Gruppo De Benedetti fare?
COFIDE - Gruppo De Benedetti has a negative payout ratio, meaning that the company is not yet profitable and is paying dividend by dipping into its retained earnings.
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 company with strong cash flow, relative to earnings, can sometimes sustain a high pay out ratio.
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. The reality facing COF investors is that whilst it has continued to pay shareholders dividend, there has not been any increase in the level of dividends paid in the past decade. However, income investors that value stability over growth may still find COF appealing.
Relative to peers, COFIDE - Gruppo De Benedetti generates a yield of 3.2%, which is high for Industrials stocks but still below the market's top dividend payers.
Next Steps:
Now you know to keep in mind the reason why investors should be careful investing in COFIDE - Gruppo De Benedetti for the dividend. 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, 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 research:
- Future Outlook: What are well-informed industry analysts predicting for COF’s future growth? Take a look at our free research report of analyst consensus for COF’s outlook.
- Valuation: What is COF 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 COF 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.
Simply Wall St analyst Simply Wall St and Simply Wall St have no position in any of the companies mentioned. This article is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.