On the 10 May 2019, VICOM Ltd (SGX:V01) will be paying shareholders an upcoming dividend amount of S$0.32 per share. However, investors must have bought the company's stock before 02 May 2019 in order to qualify for the payment. That means you have only 3 days left! Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I examine VICOM's latest financial data to analyse its dividend characteristics.
View our latest analysis for VICOM
Here's how I find good dividend stocks
When assessing a stock as a potential addition to my dividend Portfolio, I look at these five areas:
-
Is its annual yield among the top 25% of dividend-paying companies?
-
Has it paid dividend every year without dramatically reducing payout in the past?
-
Has dividend per share risen in the past couple of years?
-
Is its earnings sufficient to payout dividend at the current rate?
-
Will it be able to continue to payout at the current rate in the future?
How does VICOM fare?
The current trailing twelve-month payout ratio for V01 is 94%, meaning the dividend is not sufficiently 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.
If you want to dive deeper into the sustainability of a certain payout ratio, you may wish to consider the cash flow of the business. Cash flow is important because companies with strong cash flow can usually sustain higher payout ratios.
Reliablity is an important factor for dividend stocks, particularly for income investors who want a strong track record of payment and a positive outlook for future payout. Although V01's per share payments have increased in the past 10 years, it has not been a completely smooth ride. Shareholders would have seen a few years of reduced payments in this time.
In terms of its peers, VICOM generates a yield of 5.4%, which is high for Commercial Services stocks but still below the market's top dividend payers.
Next Steps:
After digging a little deeper into VICOM'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. 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 fundamental factors you should further examine: