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Dividends play a key role in compounding returns over time and can form a large part of our portfolio return. Fisher & Paykel Healthcare Corporation Limited (NZSE:FPH) has returned to shareholders over the past 10 years, an average dividend yield of 4.00% annually. Should it have a place in your portfolio? Let’s take a look at Fisher & Paykel Healthcare in more detail. See our latest analysis for Fisher & Paykel Healthcare
5 checks you should use to assess a dividend stock
If you are a dividend investor, you should always assess these five key metrics:
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Is it the top 25% annual dividend yield payer?
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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 it able 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 Fisher & Paykel Healthcare fit our criteria?
Fisher & Paykel Healthcare has a trailing twelve-month payout ratio of 65.97%, which means that the dividend is covered by earnings. In the near future, analysts are predicting a higher payout ratio of 75.70%, leading to a dividend yield of around 2.20%. Furthermore, EPS should increase to NZ$0.36. The higher payout forecasted, along with higher earnings, should lead to greater dividend income for investors moving forward. If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. Whilst its per-share payments have increased during the past 10 years, there has been some hiccups. Investors have seen reductions in the dividend per share in the past, although, it has picked up again. Compared to its peers, Fisher & Paykel Healthcare has a yield of 1.57%, which is high for Medical Equipment stocks but still below the low risk savings rate.
Next Steps:
If you are building an income portfolio, then Fisher & Paykel Healthcare 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, I recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. There are three key aspects you should look at:
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1. Future Outlook: What are well-informed industry analysts predicting for FPH’s future growth? Take a look at our free research report of analyst consensus for FPH’s outlook.
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2. Valuation: What is FPH worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether FPH is currently mispriced by the market.
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3. Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.