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Shares of Croda International Plc (LON:CRDA) will begin trading ex-dividend in 2 days. To qualify for the dividend check of UK£0.38 per share, investors must have owned the shares prior to 23 August 2018, which is the last day the company’s management will finalize their list of shareholders to which they will send dividend payments. What does this mean for current shareholders and potential investors? Below, I will explain how holding Croda International can impact your portfolio income stream, by analysing the stock’s most recent financial data and dividend attributes.

Check out our latest analysis for Croda International

5 questions to ask before buying a dividend stock

If you are a dividend investor, you should always assess these five key metrics:

• Does it pay an annual yield higher than 75% of dividend payers?

• Does it consistently pay out dividends without missing a payment of significantly cutting payout?

• Has dividend per share amount increased over the past?

• Does earnings amply cover its dividend payments?

• Based on future earnings growth, will it be able to continue to payout dividend at the current rate?

Does Croda International pass our checks?

The current trailing twelve-month payout ratio for the stock is 44.84%, which means that the dividend is covered by earnings. In the near future, analysts are predicting a higher payout ratio of 54.38%, leading to a dividend yield of 2.13%. In addition to this, EPS should increase to £2. The higher payout forecasted, along with higher earnings, should lead to greater dividend income for investors moving forward.

If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. In the case of CRDA it has increased its DPS from £0.18 to £0.84 in the past 10 years. It has also been paying out dividend consistently during this time, as you’d expect for a company increasing its dividend levels. This is an impressive feat, which makes CRDA a true dividend rockstar.

Compared to its peers, Croda International produces a yield of 1.64%, which is on the low-side for Chemicals stocks.

Next Steps:

Keeping in mind the dividend characteristics above, Croda International is definitely worth considering for investors looking to build a dedicated income portfolio. Given that this is purely a dividend analysis, I recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. There are three relevant factors you should further research: