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Important news for shareholders and potential investors in The Berkeley Group Holdings plc (LON:BKG): The dividend payment of UK£0.33 per share will be distributed into shareholder on 14 September 2018, and the stock will begin trading ex-dividend at an earlier date, 23 August 2018. Is this future income a persuasive enough catalyst for investors to think about Berkeley Group Holdings as an investment today? Below, I’m going to look at the latest data and analyze the stock and its dividend property in further detail.

Check out our latest analysis for Berkeley Group Holdings

How I analyze a dividend stock

When assessing a stock as a potential addition to my dividend Portfolio, I look at these five areas:

• Is their annual yield among the top 25% of dividend payers?

• Does it consistently pay out dividends without missing a payment of significantly cutting payout?

• Has dividend per share risen in the past couple of years?

• Does earnings amply cover its dividend payments?

• Will the company be able to keep paying dividend based on the future earnings growth?

Does Berkeley Group Holdings pass our checks?

The company currently pays out 16.00% of its earnings as a dividend, according to its trailing twelve-month data, meaning the dividend is sufficiently covered by earnings. Going forward, analysts expect BKG’s payout to increase to 60.06% of its earnings, which leads to a dividend yield of around 5.40%. However, EPS is forecasted to fall to £3.79 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. The reality is that it is too early to consider Berkeley Group Holdings as a dividend investment. It has only been consistently paying dividends for 5 years, however, standard practice for reliable payers is to look for a 10-year minimum track record.

Compared to its peers, Berkeley Group Holdings produces a yield of 2.41%, which is on the low-side for Consumer Durables stocks.

Next Steps:

Whilst there are few things you may like about Berkeley Group Holdings from a dividend stock perspective, the truth is that overall it probably is not the best choice for a dividend investor. 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, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. Below, I’ve compiled three key factors you should further research: