Investors who want to cash in on Torslanda Property Investment AB (Publ)’s (STO:TORSAB) upcoming dividend of kr2.00 per share have only 4 days left to buy the shares before its ex-dividend date, 12 October 2018, in time for dividends payable on the 18 October 2018. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I examine Torslanda Property Investment’s latest financial data to analyse its dividend characteristics.
Check out our latest analysis for Torslanda Property Investment
How I analyze a dividend stock
When researching a dividend stock, I always follow the following screening criteria:
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Is their 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 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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Based on future earnings growth, will it be able to continue to payout dividend at the current rate?
How well does Torslanda Property Investment fit our criteria?
Torslanda Property Investment has a trailing twelve-month payout ratio of 100%, which means that the dividend is not well-covered by its earnings. 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.
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. Unfortunately, it is really too early to view Torslanda Property Investment as a dividend investment. It has only been consistently paying dividends for 4 years, however, standard practice for reliable payers is to look for a 10-year minimum track record.
Compared to its peers, Torslanda Property Investment generates a yield of 6.0%, which is high for Real Estate stocks.
Next Steps:
After digging a little deeper into Torslanda Property Investment’s yield, it’s easy to see why you should be cautious investing in the company just for the dividend. On the other hand, if you are not strictly just a dividend investor, the stock could still be offering some interesting investment opportunities. Given that this is purely a dividend analysis, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. There are three important aspects you should further examine: