Is GameStop Corp (NYSE:GME) A Good Dividend Stock?

A large part of investment returns can be generated by dividend-paying stock given their role in compounding returns over time. GameStop Corp (NYSE:GME) has returned to shareholders over the past 6 years, an average dividend yield of 4.00% annually. Let's dig deeper into whether GameStop should have a place in your portfolio. Check out our latest analysis for GameStop

Here's how I find good dividend stocks

If you are a dividend investor, you should always assess these five key 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 the amount of dividend per share grown over the past?
• Can it afford to pay the current rate of dividends from its earnings?
• Will it be able to continue to payout at the current rate in the future?

How does GameStop fare?

GameStop has a trailing twelve-month payout ratio of 43.92%, which means that the dividend is covered by earnings. In the near future, analysts are predicting a payout ratio of 48.00%, leading to a dividend yield of around 9.79%. Furthermore, EPS is forecasted to fall to $3.3 in the upcoming year. 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. The reality is that it is too early to consider GameStop 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. In terms of its peers, GameStop produces a yield of 9.37%, which is high for Specialty Retail stocks.

Next Steps:

With these dividend metrics in mind, I definitely rank GameStop as a strong income stock, and is worth further research for anyone who considers dividends an important part of their portfolio strategy. 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. There are three important aspects you should further research:

• 1. Future Outlook: What are well-informed industry analysts predicting for GME’s future growth? Take a look at our free research report of analyst consensus for GME’s outlook.
• 2. Valuation: What is GME 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 GME is currently mispriced by the market.
• 3. Other 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.