Shares of COLTENE Holding AG (VTX:CLTN) will begin trading ex-dividend in 3 days. To qualify for the dividend check of CHF3.00 per share, investors must have owned the shares prior to 03 May 2019, which is the last day the company's management will finalize their list of shareholders to which they will send dividend payments. Should you diversify into COLTENE Holding and boost your portfolio income stream? Well, keep on reading because today, I'm going to look at the latest data and analyze the stock and its dividend property in further detail.
View our latest analysis for COLTENE Holding
5 checks you should use to assess 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 it paid dividend every year without dramatically reducing payout in the past?
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Has the amount of dividend per share grown over the past?
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Is its earnings sufficient to payout dividend at the current rate?
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Based on future earnings growth, will it be able to continue to payout dividend at the current rate?
Does COLTENE Holding pass our checks?
The company currently pays out 95% of its earnings as a dividend, according to its trailing twelve-month data, which means that the dividend is not well-covered by its earnings. However, going forward, analysts expect CLTN's payout to fall into a more sustainable range of 63% of its earnings. Assuming a constant share price, this equates to a dividend yield of 3.9%. Moreover, EPS should increase to CHF4.95, 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. A business with strong cash flow can sustain a higher divided payout ratio than a company with weak cash flow.
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. The reality is that it is too early to consider COLTENE Holding as a dividend investment. It has only been consistently paying dividends for 9 years, however, standard practice for reliable payers is to look for a 10-year minimum track record.
Compared to its peers, COLTENE Holding generates a yield of 3.2%, which is high for Medical Equipment stocks but still below the market's top dividend payers.
Next Steps:
After digging a little deeper into COLTENE Holding's yield, it's easy to see why you should be cautious investing in the company just for the dividend. On the other hand, if you are not strictly just a dividend investor, the stock could still be offering some interesting investment opportunities. 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. There are three relevant factors you should look at: