Investors who want to cash in on DSW Inc’s (NYSE:DSW) upcoming dividend of $0.25 per share have only 9 days left to buy the shares before its ex-dividend date, 20 June 2018, in time for dividends payable on the 05 July 2018. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I take a deeper dive into DSW’s latest financial data to analyse its dividend attributes. See our latest analysis for DSW
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 the top 25% annual dividend yield payer?
- Does it consistently pay out dividends without missing a payment of significantly cutting payout?
- Has dividend per share amount increased over the past?
- Is its earnings sufficient to payout dividend at the current rate?
- Will the company be able to keep paying dividend based on the future earnings growth?
How does DSW fare?The current trailing twelve-month payout ratio for DSW is 99.03%, meaning the dividend is not sufficiently covered by its earnings. However, going forward, analysts expect DSW’s payout to fall into a more sustainable range of 52.37% of its earnings, which leads to a dividend yield of 3.61%. Furthermore, EPS should increase to $1.57, 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 DSW as a dividend investment. It has only been consistently paying dividends for 7 years, however, standard practice for reliable payers is to look for a 10-year minimum track record. In terms of its peers, DSW generates a yield of 4.04%, which is high for Specialty Retail stocks but still below the market’s top dividend payers.
Now you know to keep in mind the reason why investors should be careful investing in DSW 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, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. Below, I’ve compiled three relevant factors you should further examine:
- Future Outlook: What are well-informed industry analysts predicting for DSW’s future growth? Take a look at our free research report of analyst consensus for DSW’s outlook.
- Valuation: What is DSW 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 DSW is currently mispriced by the market.
- Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.