Dividends play an important role in compounding returns in the long run and end up forming a sizeable part of investment returns. Recently, Madhya Pradesh Today Media Limited (NSE:MPTODAY) has started paying dividends to shareholders. Today it yields 1.3%. Let’s dig deeper into whether Madhya Pradesh Today Media should have a place in your portfolio.
See our latest analysis for Madhya Pradesh Today Media
Here’s how I find good dividend stocks
When assessing a stock as a potential addition to my dividend Portfolio, I look at these five areas:
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Is it the top 25% annual dividend yield payer?
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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 it increased its dividend per share amount 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?
How well does Madhya Pradesh Today Media fit our criteria?
Madhya Pradesh Today Media has a trailing twelve-month payout ratio of 5.7%, which means that the dividend is covered by earnings. Furthermore, analysts have not forecasted a dividends per share for the future, which makes it hard to determine the yield shareholders should expect, and whether the current payout is sustainable, moving forward.
When considering the sustainability of dividends, it is also worth checking the cash flow of a company. Companies with strong cash flow can sustain a higher payout ratio, while companies with weaker cash flow generally cannot.
If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. The reality is that it is too early to consider Madhya Pradesh Today Media as a dividend investment. It has only been paying out dividend for the past one year. Generally, the rule of thumb for determining whether a stock is a reliable dividend payer is that it should be consistently paying dividends for the past 10 years or more. Clearly there’s a long road ahead before we can ascertain whether MPTODAY one as a stable dividend player.
Relative to peers, Madhya Pradesh Today Media has a yield of 1.3%, which is on the low-side for Media stocks.
Next Steps:
After digging a little deeper into Madhya Pradesh Today Media’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, I recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. I’ve put together three key aspects you should look at: