Dividends play an important role in compounding returns in the long run and end up forming a sizeable part of investment returns. BG Staffing Inc (AMEX:BGSF) has returned to shareholders over the past 3 years, an average dividend yield of 7.00% annually. Let’s dig deeper into whether BG Staffing should have a place in your portfolio. View our latest analysis for BG Staffing
5 checks you should use to assess a dividend stock
Whenever I am looking at a potential dividend stock investment, I always check these five metrics:
- Is it paying an annual yield above 75% of dividend payers?
- Has it consistently paid a stable dividend without missing a payment or drastically cutting payout?
- Has dividend per share amount increased over the past?
- Can it afford to pay the current rate of dividends from its earnings?
- Will it have the ability to keep paying its dividends going forward?
Does BG Staffing pass our checks?BG Staffing has a trailing twelve-month payout ratio of 131.13%, which means that the dividend is not well-covered by its earnings. Furthermore, analysts have not forecasted a dividends per share for the future, which makes it hard to determine the yield shareholders should expect, and whether the current payout is sustainable, moving forward. If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. Unfortunately, it is really too early to view BG Staffing as a dividend investment. It has only been consistently paying dividends for 3 years, however, standard practice for reliable payers is to look for a 10-year minimum track record. Relative to peers, BG Staffing has a yield of 4.76%, which is high for Professional Services stocks.
After digging a little deeper into BG Staffing’s yield, it’s easy to see why you should be cautious investing in the company just 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 recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. There are three pertinent aspects you should further research:
- Future Outlook: What are well-informed industry analysts predicting for BGSF’s future growth? Take a look at our free research report of analyst consensus for BGSF’s outlook.
- Valuation: What is BGSF 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 BGSF 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.