Investors who want to cash in on Cypress Semiconductor Corporation’s (NASDAQ:CY) upcoming dividend of $0.11 per share have only 3 days left to buy the shares before its ex-dividend date, 27 December 2017, in time for dividends payable on the 18 January 2018. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I examine Cypress Semiconductor’s latest financial data to analyse its dividend characteristics. View our latest analysis for Cypress Semiconductor
5 questions I ask before picking a dividend stock
Whenever I am looking at a potential dividend stock investment, I always check these five metrics:
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Does it pay an annual yield higher than 75% of dividend payers?
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Does it consistently pay out dividends without missing a payment of significantly cutting payout?
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Has dividend per share risen in the past couple of years?
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Does earnings amply cover its dividend payments?
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Will it be able to continue to payout at the current rate in the future?
How well does Cypress Semiconductor fit our criteria?
Cypress Semiconductor has a negative payout ratio, meaning that the company is not yet profitable and is paying dividend by dipping into its retained earnings. 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 Cypress Semiconductor as a dividend investment. It has only been consistently paying dividends for 7 years, however, standard practice for reliable payers is to look for a 10-year minimum track record. In terms of its peers, Cypress Semiconductor generates a yield of 2.87%, which is high for semiconductors and semiconductor equipment stocks but still below the market’s top dividend payers.
What this means for you:
Are you a shareholder? You may be wondering why Cypress Semiconductor is paying out dividends at all, instead of re-investing into the business to generate higher cash flows in the future. It may be valuable exploring other dividend stocks as alternatives to Cypress Semiconductor 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.
Are you a potential investor? After digging a little deeper into Cypress Semiconductor’s yield, it’s easy to see why you should be cautious investing in the company just for the dividend. But if you are not exclusively a dividend investor, the stock could still be an interesting investment opportunity. As always, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. Check our latest free fundmental analysis to explore other aspects of Cypress Semiconductor.
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.