Shares of KP Tissue Inc (TSX:KPT) will begin trading ex-dividend in 3 days. To qualify for the dividend check of CA$0.18 per share, investors must have owned the shares prior to 28 December 2017, which is the last day the company’s management will finalize their list of shareholders to which they will send dividend payments. Should you diversify into KP Tissue and boost your portfolio income stream? Well, keep on reading because today, I’m going to look at the latest data and analyze the stock and its dividend property in further detail. See our latest analysis for KP Tissue
5 checks you should use to assess a dividend stock
When assessing a stock as a potential addition to my dividend Portfolio, I look at these five areas:
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Does it pay an annual yield higher than 75% of dividend payers?
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Does it consistently pay out dividends without missing a payment of significantly cutting payout?
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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?
Does KP Tissue pass our checks?
KP Tissue has a negative payout ratio, which means that it is loss-making, and paying its dividend from its retained earnings. 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. The reality is that it is too early to consider KP Tissue as a dividend investment. It has only been consistently paying dividends for 5 years, however, standard practice for reliable payers is to look for a 10-year minimum track record. In terms of its peers, KP Tissue has a yield of 5.38%, which is high for household products stocks.
What this means for you:
Are you a shareholder? If KP Tissue is in your portfolio for cash-generating reasons, there may be better alternatives out there. It may be valuable exploring other income stocks as alternatives to KP Tissue or even look at high-growth stocks to complement your steady income stocks. I encourage you to continue your research by taking a look at my interactive free list of dividend rockstars as well as high-growth stocks to potentially add to your holdings.
Are you a potential investor? If you are building an income portfolio, then KP Tissue 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. As with all investments, 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. Check our latest free fundmental analysis to explore other aspects of KP Tissue.
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.