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Have you been keeping an eye on Strix Group Plc’s (LON:KETL) upcoming dividend of UK£0.023 per share payable on the 26 October 2018? Then you only have 4 days left before the stock starts trading ex-dividend on the 27 September 2018. 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 Strix Group’s most recent financial data to examine its dividend characteristics in more detail.
View our latest analysis for Strix Group
5 checks you should use to assess a dividend stock
When assessing a stock as a potential addition to my dividend Portfolio, I look at these five areas:
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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 dividend per share risen in the past couple of years?
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Can it afford to pay the current rate of dividends from its earnings?
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Will it be able to continue to payout at the current rate in the future?
How well does Strix Group fit our criteria?
The current trailing twelve-month payout ratio for the stock is 24.4%, meaning the dividend is sufficiently covered by earnings. Going forward, analysts expect KETL’s payout to increase to 51.4% of its earnings, which leads to a dividend yield of 4.7%.
When assessing the forecast sustainability of a dividend it is also worth considering the cash flow of the business. A business with strong cash flow can sustain a higher divided payout ratio than a company with weak cash flow.
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. Unfortunately, it is really too early to view Strix Group as a dividend investment. Last year was the company’s first dividend payment, so it is certainly early days. The standard practice for reliable payers is to look for 10 or so years of track record.
Compared to its peers, Strix Group produces a yield of 4.4%, which is high for Electronic stocks but still below the market’s top dividend payers.
Next Steps:
If you are building an income portfolio, then Strix Group is a complicated choice since it has some positive aspects as well as negative ones. But if you are not exclusively a dividend investor, the stock could still be an interesting investment opportunity. Given that this is purely a dividend analysis, 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. I’ve put together three important aspects you should further research: