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Attention dividend hunters! Broadridge Financial Solutions, Inc. (NYSE:BR) will be distributing its dividend of US$0.48 per share on the 03 April 2019, and will start trading ex-dividend in 3 days time on the 14 March 2019. Is this future income stream a compelling catalyst for dividend investors to think about the stock as an investment today? Let’s take a look at Broadridge Financial Solutions’s most recent financial data to examine its dividend characteristics in more detail.
See our latest analysis for Broadridge Financial Solutions
5 questions I ask before picking a dividend stock
If you are a dividend investor, you should always assess these five key metrics:
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Is it paying an annual yield above 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 the amount of dividend per share grown over the past?
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Is is able to pay the current rate of dividends from its earnings?
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Will the company be able to keep paying dividend based on the future earnings growth?
Does Broadridge Financial Solutions pass our checks?
The company currently pays out 45% of its earnings as a dividend, according to its trailing twelve-month data, meaning the dividend is sufficiently covered by earnings. However, going forward, analysts expect BR’s payout to fall to 37% of its earnings. Assuming a constant share price, this equates to a dividend yield of 2.1%. However, EPS should increase to $4.3, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment.
When thinking about whether a dividend is sustainable, another factor to consider is the cash flow. Cash flow is important because companies with strong cash flow can usually sustain higher payout ratios.
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. BR has increased its DPS from $0.28 to $1.94 in the past 10 years. It has also been paying out dividend consistently during this time, as you’d expect for a company increasing its dividend levels. These are all positive signs of a great, reliable dividend stock.
In terms of its peers, Broadridge Financial Solutions produces a yield of 2.0%, which is high for IT stocks but still below the market’s top dividend payers.
Next Steps:
With this in mind, I definitely rank Broadridge Financial Solutions as a strong dividend stock, and makes it worth further research for anyone who likes steady income generation from their portfolio. 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. I’ve put together three key factors you should look at: