Dividends play an important role in compounding returns in the long run and end up forming a sizeable part of investment returns. In the past 10 years Big 5 Sporting Goods Corporation (NASDAQ:BGFV) has returned an average of 4.00% per year to investors in the form of dividend payouts. Should it have a place in your portfolio? Let’s take a look at Big 5 Sporting Goods in more detail. Check out our latest analysis for Big 5 Sporting Goods
5 questions I ask before picking a dividend stock
If you are a dividend investor, you should always assess these five key metrics:
- Is their annual yield among the top 25% of dividend payers?
- Has it paid dividend every year without dramatically reducing payout in the past?
- Has dividend per share risen in the past couple of years?
- 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 Big 5 Sporting Goods pass our checks?
The current payout ratio for BGFV is negative, meaning that the company is not yet profitable and is paying dividend by dipping into its retained earnings.
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. Although BGFV’s per share payments have increased in the past 10 years, it has not been a completely smooth ride. Shareholders would have seen a few years of reduced payments in this time.In terms of its peers, Big 5 Sporting Goods generates a yield of 7.19%, which is high for Specialty Retail stocks.
If Big 5 Sporting Goods is in your portfolio for cash-generating reasons, there may be better alternatives out there. 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. I’ve put together three relevant aspects you should further research:
- Future Outlook: What are well-informed industry analysts predicting for BGFV’s future growth? Take a look at our free research report of analyst consensus for BGFV’s outlook.
- Historical Performance: What has BGFV’s returns been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
- Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.