Investors who want to cash in on Exchange Income Corporation’s (TSX:EIF) upcoming dividend of CA$0.18 per share have only 3 days left to buy the shares before its ex-dividend date, 28 December 2017, in time for dividends payable on the 15 January 2018. Should you diversify into Exchange Income 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 Exchange Income
5 questions I ask before picking 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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Is its annual yield among the top 25% of dividend payers?
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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 the amount of dividend per share grown over the past?
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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 Exchange Income fit our criteria?
The current payout ratio for EIF is 92.12%, meaning the dividend is not sufficiently covered by its earnings. In the near future, analysts are predicting a more sensible payout ratio of 83.91%, leading to a dividend yield of 6.68%. In addition to this, EPS should increase to CA$2.6, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment. 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. In the case of EIF it has increased its DPS from CA$1.5 to CA$2.1 in the past 10 years. During this period it has not missed a payment, as one would expect for a company increasing its dividend. These are all positive signs of a great, reliable dividend stock. In terms of its peers, Exchange Income generates a yield of 5.99%, which is high for airlines stocks.
What this means for you:
Are you a shareholder? With Exchange Income producing strong dividend income for your portfolio over the past few years, you can take comfort in knowing that this stock will still continue to be a robust dividend generator moving forward. But, depending on your current portfolio, it may be beneficial exploring other dividend stocks to improve your diversification, or even look at high-growth stocks to supplement your steady income stocks. I encourage you to continue your research by checking out my interactive free list of dividend rockstars as well as high-growth stocks to potentially add to your holdings.