Should Income Investors Buy The GEO Group Inc (NYSE:GEO) Before Its Ex-Dividend?

Shares of The GEO Group Inc (NYSE:GEO) will begin trading ex-dividend in 3 days. To qualify for the dividend check of $0.47 per share, investors must have owned the shares prior to 20 April 2018, which is the last day the company's management will finalize their list of shareholders to which they will send dividend payments. What does this mean for current shareholders and potential investors? Below, I will explain how holding GEO Group can impact your portfolio income stream, by analysing the stock's most recent financial data and dividend attributes. Check out our latest analysis for GEO 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:

• Does it pay an annual yield higher than 75% of dividend payers?
• Has it paid dividend every year without dramatically reducing payout in the past?
• Has the amount of dividend per share grown 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?

Does GEO Group pass our checks?

REITs are a special-case dividend payer. This is because a high percentage of their earnings are required to be paid out as dividends. The company currently pays out 154.39% of its earnings as a dividend, according to its trailing twelve-month data, meaning that a portion of dividend payments are funded by retained earnings. In the near future, analysts are predicting a lower payout ratio of 137.54%, leading to a dividend yield of around 9.20%. However, EPS should increase to $1.33, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment. If there's one type of stock you want to be reliable, it's dividend stocks and their stable income-generating ability. Unfortunately, it is really too early to view GEO Group as a dividend investment. It has only been consistently paying dividends for 6 years, however, standard practice for reliable payers is to look for a 10-year minimum track record. Relative to peers, GEO Group produces a yield of 8.68%, which is high for REITs stocks.

Next Steps:

After digging a little deeper into GEO Group's yield, it's easy to see why you should be cautious investing in the company just for the dividend. But if you are not exclusively a dividend investor, the stock could still be an interesting investment opportunity. Given that 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. There are three key aspects you should further research:

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

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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.