On the 10 January 2018, Royal Mail plc (LSE:RMG) will be paying shareholders an upcoming dividend amount of £0.08 per share. However, investors must have bought the company’s stock before 07 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 RMG can impact your portfolio income stream, by analysing the stock’s most recent financial data and dividend attributes. View our latest analysis for Royal Mail
Here’s how I find good dividend stocks
If you are a dividend investor, you should always assess these five key metrics:
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Does it pay an annual yield higher than 75% of dividend payers?
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Has it paid dividend every year without dramatically reducing payout in the past?
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Has it increased its dividend per share amount 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 Royal Mail fit our criteria?
The current payout ratio for the stock is 64.68%, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting a payout ratio of 61.83%, leading to a dividend yield of 5.85%. Moreover, EPS is forecasted to fall to £0.25 in the upcoming year. 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 Royal Mail as a dividend investment. It has only been consistently paying dividends for 3 years, however, standard practice for reliable payers is to look for a 10-year minimum track record. Relative to peers, Royal Mail produces a yield of 5.49%, which is high for air freight and logistics stocks.
What this means for you:
Are you a shareholder?
Are you a shareholder? Investors of Royal Mail can continue to expect strong dividends from the stock moving forward. With its favorable dividend characteristics, RMG is one worth keeping around in your income portfolio. But, depending on your portfolio composition, it may be beneficial exploring other dividend stocks to enhance your diversification, or even look at high-growth stocks to complement your steady income stocks. I suggest continuing your research by exploring my interactive free list of dividend rockstars as well as high-growth stocks to potentially add to your holdings.
Are you a potential investor? Taking into account the dividend metrics, Royal Mail ticks most of the boxes as a strong dividend investment, putting it in my list of top dividend payers. 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. Another aspect to consider for RMG is how much it’s actually worth. Can you buy RMG for a great price? Check our latest free analysis to find out!
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.