On the 16 January 2018, RELM Wireless Corporation (AMEX:RWC) will be paying shareholders an upcoming dividend amount of $0.02 per share. However, investors must have bought the company’s stock before 29 December 2017 in order to qualify for the payment. That means you have only 3 days left! What does this mean for current shareholders and potential investors? Below, I will explain how holding RELM Wireless can impact your portfolio income stream, by analysing the stock’s most recent financial data and dividend attributes. Check out our latest analysis for RELM Wireless
How I analyze a dividend stock
If you are a dividend investor, you should always assess these five key metrics:
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Is its annual yield among the top 25% of dividend-paying companies?
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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 amount increased over the past?
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Is its earnings sufficient to payout dividend at the current rate?
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Will the company be able to keep paying dividend based on the future earnings growth?
How well does RELM Wireless fit our criteria?
The company currently pays out more than double of its earnings as a dividend, which suggests that the dividend is not well-covered by earnings by any means. 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. 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 RELM Wireless as a dividend investment. It has only been consistently paying dividends for 2 years, however, standard practice for reliable payers is to look for a 10-year minimum track record. Compared to its peers, RELM Wireless has a yield of 2.22%, which is on the low-side for communications stocks.
What this means for you:
Are you a shareholder? You may be wondering why RELM Wireless 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 income stocks as alternatives to RELM Wireless or even look at high-growth stocks to complement your steady income stocks. I suggest continuing your research by taking a look at 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 RELM Wireless’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. I also recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. Take a look at our latest free fundmental analysis to explore other aspects of RELM Wireless.
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.