Should Investors Buy Greif, Inc. (NYSE:GEF) And Lock In The 4.5% Dividend Yield?

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Greif, Inc. (NYSE:GEF) is a true Dividend Rock Star. Its yield of 4.5% makes it one of the market's top dividend payer. In the past ten years, Greif has also grown its dividend from $1.52 to $1.76. Below, I have outlined more attractive dividend aspects for Greif for income investors who may be interested in new dividend stocks for their portfolio.

See our latest analysis for Greif

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 dividend per share amount has increased over the past
• It is able to pay the current rate of dividends from its earnings
• It has the ability to keep paying its dividends going forward

High Yield And Dependable

The company's dividend yield stands at 4.5%, which is high for Packaging stocks. But the real reason Greif 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's one type of stock you want to be reliable, it's dividend stocks and their stable income-generating ability. GEF has increased its DPS from $1.52 to $1.76 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.

The current trailing twelve-month payout ratio for the stock is 39%, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting a higher payout ratio of 46% which, assuming the share price stays the same, leads to a dividend yield of 4.5%. However, EPS is forecasted to fall to $3.71 in the upcoming year. Therefore, although payout is expected to increase, the fall in earnings may not equate to higher dividend income.

When thinking about whether a dividend is sustainable, another factor to consider is the cash flow. Companies with strong cash flow can sustain a higher payout ratio, while companies with weaker cash flow generally cannot.

Next Steps:

Investors of Greif can continue to expect strong dividends from the stock. With its favorable dividend characteristics, if high income generation is still the goal for your portfolio, then Greif is one worth keeping around. However, given this is purely a dividend analysis, you should always research extensively before deciding whether or not a stock is an appropriate investment for you. I always recommend analysing the company's fundamentals and underlying business before making an investment decision. Below, I've compiled three important aspects you should further research:

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