Dividends play a key role in compounding returns over time and can form a large part of our portfolio return. Historically, Komax Holding AG (VTX:KOMN) has paid dividends to shareholders, and these days it yields 2.1%. Should it have a place in your portfolio? Let’s take a look at Komax Holding in more detail.
View our latest analysis for Komax Holding
5 questions I ask before picking a dividend stock
When researching a dividend stock, I always follow the following screening criteria:
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Does it pay an annual yield higher than 75% of dividend payers?
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Has it paid dividend every year without dramatically reducing payout in the past?
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Has dividend per share amount increased over the past?
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Is its earnings sufficient to payout dividend at the current rate?
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Will it have the ability to keep paying its dividends going forward?
How well does Komax Holding fit our criteria?
The current trailing twelve-month payout ratio for the stock is 48%, which means that the dividend is covered by earnings. Going forward, analysts expect KOMN’s payout to remain around the same level at 51% of its earnings, which leads to a dividend yield of around 2.6%. Furthermore, EPS should increase to CHF15.16.
When thinking about whether a dividend is sustainable, another factor to consider is the cash flow. 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. Whilst its per-share payments have increased during the past 10 years, there has been some hiccups. Shareholders would have seen a few years of reduced payments in this time.
Relative to peers, Komax Holding generates a yield of 2.1%, which is high for Machinery stocks but still below the market’s top dividend payers.
Next Steps:
Keeping in mind the dividend characteristics above, Komax Holding is definitely worth considering for investors looking to build a dedicated income portfolio. 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. I’ve put together three fundamental aspects you should look at:
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Future Outlook: What are well-informed industry analysts predicting for KOMN’s future growth? Take a look at our free research report of analyst consensus for KOMN’s outlook.
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Valuation: What is KOMN worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether KOMN is currently mispriced by the market.
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Other Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.
To help readers see past 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. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.