Attention dividend hunters! Monsanto Company (NYSE:MON) will be distributing its dividend of $0.54 per share on the 26 January 2018, and will start trading ex-dividend in 3 days time on the 04 January 2018. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I examine Monsanto’s latest financial data to analyse its dividend characteristics. Check out our latest analysis for Monsanto
Here’s how I find good dividend stocks
If you are a dividend investor, you should always assess these five key metrics:
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Does it pay an annual yield higher than 75% of dividend payers?
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Has it consistently paid a stable dividend without missing a payment or drastically cutting payout?
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Has it increased its dividend per share amount over the past?
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Is its earnings sufficient to payout dividend at the current rate?
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Based on future earnings growth, will it be able to continue to payout dividend at the current rate?
Does Monsanto pass our checks?
Monsanto has a payout ratio of 42.18%, meaning the dividend is sufficiently covered by earnings. However, going forward, analysts expect MON’s payout to fall to 33.11% of its earnings, which leads to a dividend yield of 2.00%. However, EPS should increase to $5.54, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment. 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. In the case of MON it has increased its DPS from $0.7 to $2.16 in the past 10 years. During this period it has not missed a payment, as one would expect for a company increasing its dividend. This is an impressive feat, which makes MON a true dividend rockstar. Compared to its peers, Monsanto has a yield of 1.85%, which is on the low-side for chemicals stocks.
What this means for you:
Are you a shareholder? Investors of Monsanto can continue to expect strong dividends from the stock moving forward. With its favorable dividend characteristics, Monsanto is one worth keeping around in your income portfolio. But, depending on your current portfolio, it may be beneficial exploring other income stocks to enhance your diversification, or even look at high-growth stocks to supplement your steady income stocks. I suggest continuing your research by exploring my interactive free list of dividend rockstars as well as high-growth stocks to potentially add to your holdings.
Are you a potential investor? Taking into account the dividend metrics, Monsanto ticks most of the boxes as a strong dividend investment, putting it in my list of top dividend payers. I also recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. Another aspect to consider for Monsanto is how much it’s actually worth. Is Monsanto overvalued or is it actually a bargain? Take a look at our latest free analysis to find out!
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.