Investors who want to cash in on 3i Group plc’s (LSE:III) upcoming dividend of £0.08 per share have only 3 days left to buy the shares before its ex-dividend date, 14 December 2017, in time for dividends payable on the 10 January 2018. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I examine III’s latest financial data to analyse its dividend characteristics. See our latest analysis for III
5 checks you should do on a dividend stock
Whenever I am looking at a potential dividend stock investment, I always check these five metrics:
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Is their annual yield among the top 25% of dividend payers?
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Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?
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Has dividend per share amount increased over the past?
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Does earnings amply cover its dividend payments?
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Based on future earnings growth, will it be able to continue to payout dividend at the current rate?
How does 3i Group fare?
The company currently pays out 12.71% of its earnings as a dividend, which means that the dividend is covered by earnings. Going forward, analysts expect III’s payout to increase to 26.88% of its earnings, which leads to a dividend yield of 3.13%. However, EPS is forecasted to fall to £1.1 in the upcoming year. Therefore, although payout is expected to increase, the fall in earnings may not equate to higher dividend income. 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. Although III’s per share payments have increased in the past 10 years, it has not been a completely smooth ride. Shareholders would have seen a few years of reduced payments in this time. Compared to its peers, 3i Group produces a yield of 3.05%, which is high for capital markets stocks but still below the market’s top dividend payers.
What this means for you:
Are you a shareholder?
Are you a shareholder? With 3i Group producing strong dividend income for your portfolio over the past few years, you can take comfort in knowing that this stock will still continue to be a robust dividend generator moving forward. But, depending on your current portfolio, it may be valuable exploring other dividend stocks to improve your diversification, or even look at high-growth stocks to supplement your steady income stocks. I suggest continuing 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.