On the 03 January 2018, De La Rue plc (LSE:DLAR) will be paying shareholders an upcoming dividend amount of £0.08 per share. However, investors must have bought the company’s stock before 07 December 2017 in order to qualify for the payment. That means you have only 3 days left! Is this future income stream a compelling catalyst for dividend investors to think about DLAR as an investment today? Let’s take a look at DLAR’s most recent financial data to examine its dividend characteristics in more detail. Check out our latest analysis for De La Rue
5 questions to ask before buying a dividend stock
If you are a dividend investor, you should always assess these five key metrics:
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Does it pay an annual yield higher than 75% of dividend payers?
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Does it consistently pay out dividends without missing a payment of significantly cutting payout?
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Has the amount of dividend per share grown over the past?
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Is its earnings sufficient to payout dividend at the current rate?
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Will the company be able to keep paying dividend based on the future earnings growth?
How does De La Rue fare?
De La Rue has a payout ratio of 51.30%, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting a payout ratio of 54.22%, leading to a dividend yield of 4.26%. Moreover, EPS is forecasted to fall to £0.48 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. Dividend payments from De La Rue have been volatile in the past 10 years, with some years experiencing significant drops of over 25%. These characteristics do not bode well for income investors seeking reliable stream of dividends. Compared to its peers, DLAR has a yield of 3.89%, which is high for commercial services and supplies stocks but still below the market’s top dividend payers.
What this means for you:
Are you a shareholder? If DLAR is in your portfolio for cash-generating reasons, there may be better alternatives out there. It may be beneficial exploring other income stocks as alternatives to DLAR or even look at high-growth stocks to supplement your steady income stocks. I encourage you to continue your research by checking out my interactive free list of dividend rockstars as well as high-growth stocks to potentially add to your holdings.
Are you a potential investor? If you are building an income portfolio, then De La Rue is a complicated choice since it has some positive aspects as well as negative ones. But if you are not exclusively a dividend investor, DLAR could still be an interesting investment opportunity. As with all investments, 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. Dig deeping in our latest free fundmental analysis to explore other aspects of DLAR.
To help readers see pass 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.