On the 02 February 2018, Topps Tiles plc (LSE:TPT) will be paying shareholders an upcoming dividend amount of £0.02 per share. However, investors must have bought the company’s stock before 21 December 2017 in order to qualify for the payment. That means you have only 3 days left! What does this mean for current shareholders and potential investors? Below, I will explain how holding Topps Tiles can impact your portfolio income stream, by analysing the stock’s most recent financial data and dividend attributes. View our latest analysis for Topps Tiles
5 questions I ask before picking a dividend stock
When researching a dividend stock, I always follow the following screening criteria:
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Does it pay an annual yield higher than 75% of dividend payers?
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Has it consistently paid a stable dividend without missing a payment or drastically cutting payout?
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Has it increased its dividend per share amount over the past?
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Does earnings amply cover its dividend payments?
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Will the company be able to keep paying dividend based on the future earnings growth?
How does Topps Tiles fare?
The company currently pays out 48.69% of its earnings as a dividend, meaning the dividend is sufficiently covered by earnings. Going forward, analysts expect TPT’s payout to remain around the same level at 48.95% of its earnings, which leads to a dividend yield of 4.70%. Moreover, EPS is forecasted to fall to £0.07 in the upcoming year. If dividend is a key criteria in your investment consideration, then you need to make sure the dividend stock you’re eyeing out is reliable in its payments. Dividend payments from Topps Tiles 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. Relative to peers, Topps Tiles has a yield of 4.32%, which is high for specialty retail stocks.
What this means for you:
Are you a shareholder? Investors of Topps Tiles can continue to expect strong dividends from the stock moving forward. With its favorable dividend characteristics, Topps Tiles is one worth keeping around in your income portfolio. But, depending on your current portfolio, it may be worth exploring other income stocks to increase diversification, or even look at high-growth stocks to supplement your steady income stocks. I encourage you to continue your research by taking a look at my interactive free list of dividend rockstars as well as high-growth stocks to potentially add to your holdings.
Are you a potential investor? Taking into account the dividend metrics, Topps Tiles ticks most of the boxes as a strong dividend investment, putting it in my list of top dividend payers. As always, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. Another aspect to consider for Topps Tiles is how much it’s actually worth. Is Topps Tiles overvalued or is it actually a bargain? Check our latest free analysis to find out!
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.