Attention dividend hunters! Ally Financial Inc (NYSE:ALLY) will be distributing its dividend of $0.13 per share on the 15 May 2018, and will start trading ex-dividend in 3 days time on the 30 April 2018. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I take a deeper dive into Ally Financial’s latest financial data to analyse its dividend attributes. See our latest analysis for Ally Financial
5 checks you should do on a dividend stock
When assessing a stock as a potential addition to my dividend Portfolio, I look at these five areas:
- Is it paying an annual yield above 75% of dividend payers?
- Does it consistently pay out dividends without missing a payment of significantly cutting payout?
- Has dividend per share risen in the past couple of years?
- Is it able to pay the current rate of dividends from its earnings?
- Will it have the ability to keep paying its dividends going forward?
How well does Ally Financial fit our criteria?Ally Financial has a trailing twelve-month payout ratio of 19.60%, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting a payout ratio of 19.38%, leading to a dividend yield of 2.26%. In addition to this, EPS should increase to $2.88. If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. Unfortunately, it is really too early to view Ally Financial as a dividend investment. It has only been consistently paying dividends for 2 years, however, standard practice for reliable payers is to look for a 10-year minimum track record. Relative to peers, Ally Financial has a yield of 1.86%, which is high for Consumer Finance stocks but still below the market’s top dividend payers.
If Ally Financial is in your portfolio for cash-generating reasons, there may be better alternatives out there. However, if you are not strictly just a dividend investor, the stock could still offer 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. I’ve put together three pertinent aspects you should further research:
- Future Outlook: What are well-informed industry analysts predicting for ALLY’s future growth? Take a look at our free research report of analyst consensus for ALLY’s outlook.
- Valuation: What is ALLY 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 ALLY 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.