If you are interested in cashing in on K3 Capital Group Plc’s (LON:K3C) upcoming dividend of UK£0.084 per share, you only have 4 days left to buy the shares before its ex-dividend date, 27 September 2018, in time for dividends payable on the 30 October 2018. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I take a deeper dive into K3 Capital Group’s latest financial data to analyse its dividend attributes.
Check out our latest analysis for K3 Capital Group
5 questions I ask before picking a dividend stock
When researching a dividend stock, I always follow the following screening criteria:
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Is it paying an annual yield above 75% 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 dividend per share amount increased over the past?
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Is is able to pay the current rate of dividends from its earnings?
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Will it have the ability to keep paying its dividends going forward?
Does K3 Capital Group pass our checks?
K3 Capital Group has a trailing twelve-month payout ratio of 79.8%, which means that the dividend is covered by earnings. Going forward, analysts expect K3C’s payout to remain around the same level at 82.7% of its earnings, which leads to a dividend yield of around 3.5%. Furthermore, EPS is forecasted to fall to £0.13 in the upcoming year.
When assessing the forecast sustainability of a dividend it is also worth considering the cash flow of the business. Companies with strong cash flow can sustain a higher payout ratio, while companies with weaker cash flow generally cannot.
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 K3 Capital Group 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 K3C one as a stable dividend player.
Relative to peers, K3 Capital Group produces a yield of 3.5%, which is high for Professional Services stocks but still below the market’s top dividend payers.
Next Steps:
If you are building an income portfolio, then K3 Capital Group is a complicated choice since it has some positive aspects as well as negative ones. But if you are not exclusively a dividend investor, the stock could still be an interesting investment opportunity. Given that this is purely a dividend analysis, you should always research extensively before deciding whether or not a stock is an appropriate investment for you. I always recommend analysing the company’s fundamentals and underlying business before making an investment decision. I’ve put together three pertinent aspects you should further examine: