Is Buying EMC Insurance Group Inc (NASDAQ:EMCI) For Its Upcoming $0.22 Dividend A Good Choice?

Shares of EMC Insurance Group Inc (NASDAQ:EMCI) will begin trading ex-dividend in 3 days. To qualify for the dividend check of $0.22 per share, investors must have owned the shares prior to 25 May 2018, which is the last day the company’s management will finalize their list of shareholders to which they will send dividend payments. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I examine EMC Insurance Group’s latest financial data to analyse its dividend characteristics. View our latest analysis for EMC Insurance Group

Here’s how I find good dividend stocks

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 paid dividend every year without dramatically reducing payout in the past?
  • Has it increased its dividend per share amount over the past?
  • Is its earnings sufficient to payout dividend at the current rate?
  • Based on future earnings growth, will it be able to continue to payout dividend at the current rate?

NasdaqGS:EMCI Historical Dividend Yield May 21st 18
NasdaqGS:EMCI Historical Dividend Yield May 21st 18

Does EMC Insurance Group pass our checks?

The company currently pays out 56.85% of its earnings as a dividend, according to its trailing twelve-month data, meaning the dividend is sufficiently covered by 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. Reliablity is an important factor for dividend stocks, particularly for income investors who want a strong track record of payment and a positive outlook for future payout. EMCI has increased its DPS from $0.48 to $0.88 in the past 10 years. During this period it has not missed a payment, as one would expect for a company increasing its dividend. These are all positive signs of a great, reliable dividend stock. Relative to peers, EMC Insurance Group produces a yield of 3.47%, which is high for Insurance stocks but still below the market’s top dividend payers.

Next Steps:

With these dividend metrics in mind, I definitely rank EMC Insurance Group 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. There are three essential factors you should look at:

  1. Future Outlook: What are well-informed industry analysts predicting for EMCI’s future growth? Take a look at our free research report of analyst consensus for EMCI’s outlook.
  2. Valuation: What is EMCI 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 EMCI is currently mispriced by the market.
  3. Other Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.