On the 01 April 2019, Tapestry, Inc. (NYSE:TPR) will be paying shareholders an upcoming dividend amount of US$0.34 per share. However, investors must have bought the company’s stock before 07 March 2019 in order to qualify for the payment. That means you have only 4 days left! Is this future income a persuasive enough catalyst for investors to think about Tapestry as an investment today? Below, I’m going to look at the latest data and analyze the stock and its dividend property in further detail.
What Is A Dividend Rock Star?
It is a stock that pays a consistent, reliable and competitive dividend over a long period of time, and is expected to continue to pay in the same manner many years to come. More specifically:
- It is paying an annual yield above 75% of dividend payers
- It has paid dividend every year without dramatically reducing payout in the past
- Its has increased its dividend per share amount over the past
- It can afford to pay the current rate of dividends from its earnings
- It is able to continue to payout at the current rate in the future
High Yield And Dependable
The company’s dividend yield stands at 3.9%, which is high for Luxury stocks. But the real reason Tapestry stands out is because it has a high chance of being able to continue to pay dividend at this level for years to come, something that is quite desirable if you are looking to create a portfolio that generates a steady stream of income.
If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. TPR has increased its DPS from $0.30 to $1.35 in the past 10 years. During this period it has not missed a payment, as one would expect for a company increasing its dividend. This is an impressive feat, which makes TPR a true dividend rockstar.
The current trailing twelve-month payout ratio for the stock is 53%, meaning the dividend is sufficiently covered by earnings. However, going forward, analysts expect TPR’s payout to fall to 48% of its earnings. Assuming a constant share price, this equates to a dividend yield of around 4.1%. However, EPS should increase to $2.58, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment.
When considering the sustainability of dividends, it is also worth checking the cash flow of a company. Companies with strong cash flow can sustain a higher payout ratio, while companies with weaker cash flow generally cannot.
Tapestry’s strong dividend attributes make it, without a doubt, a stock dividend investors should be considering for their portfolios. However, given 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. I’ve put together three key factors you should further research:
- Future Outlook: What are well-informed industry analysts predicting for TPR’s future growth? Take a look at our free research report of analyst consensus for TPR’s outlook.
- Valuation: What is TPR 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 TPR is currently mispriced by the market.
- Other Dividend Rockstars: Are there strong dividend payers with better fundamentals out there? Check out our free list of these great stocks here.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.