If you are interested in cashing in on WestRock Company’s (NYSE:WRK) upcoming dividend of US$0.43 per share, you only have 2 days left to buy the shares before its ex-dividend date, 09 August 2018, in time for dividends payable on the 20 August 2018. Is this future income stream a compelling catalyst for dividend investors to think about the stock as an investment today? Let’s take a look at WestRock’s most recent financial data to examine its dividend characteristics in more detail.
5 checks you should do on a dividend stock
When researching a dividend stock, I always follow the following screening criteria:
- Is their annual yield among the top 25% of dividend payers?
- Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?
- Has dividend per share risen in the past couple of years?
- Is its earnings sufficient to payout dividend at the current rate?
- Will it have the ability to keep paying its dividends going forward?
How does WestRock fare?
WestRock has a trailing twelve-month payout ratio of 23.74%, meaning the dividend is sufficiently covered by earnings. Going forward, analysts expect WRK’s payout to increase to 40.26% of its earnings, which leads to a dividend yield of around 3.28%. However, EPS is forecasted to fall to $5.31 in the upcoming year. Therefore, although payout is expected to increase, the fall in earnings may not equate to higher dividend income.
If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. In the case of WRK it has increased its DPS from $0.20 to $1.72 in the past 10 years. It has also been paying out dividend consistently during this time, as you’d expect for a company increasing its dividend levels. This is an impressive feat, which makes WRK a true dividend rockstar.
In terms of its peers, WestRock generates a yield of 3.08%, which is high for Packaging stocks but still below the market’s top dividend payers.
Keeping in mind the dividend characteristics above, WestRock is definitely worth considering for investors looking to build a dedicated income portfolio. 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. Below, I’ve compiled three relevant aspects you should further examine:
- Future Outlook: What are well-informed industry analysts predicting for WRK’s future growth? Take a look at our free research report of analyst consensus for WRK’s outlook.
- Valuation: What is WRK 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 WRK is currently mispriced by the market.
- Other Dividend Rockstars: Are there better dividend payers with stronger 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 firstname.lastname@example.org.