Important news for shareholders and potential investors in goeasy Ltd (TSX:GSY): The dividend payment of CA$0.18 per share will be distributed into shareholder on 12 January 2018, and the stock will begin trading ex-dividend at an earlier date, 28 December 2017. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I examine goeasy’s latest financial data to analyse its dividend characteristics. Check out our latest analysis for goeasy
How I analyze a dividend stock
Whenever I am looking at a potential dividend stock investment, I always check these five metrics:
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Is it the top 25% annual dividend yield payer?
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Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?
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Has it increased its dividend per share amount over the past?
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Can it afford to pay the current rate of dividends from its earnings?
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Based on future earnings growth, will it be able to continue to payout dividend at the current rate?
Does goeasy pass our checks?
The current payout ratio for the stock is 22.96%, meaning the dividend is sufficiently covered by earnings. However, going forward, analysts expect GSY’s payout to fall to 16.56% of its earnings, which leads to a dividend yield of around 2.33%. However, EPS should increase to CA$3.2, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment. 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. GSY has increased its DPS from CA$0.28 to CA$0.72 in the past 10 years. During this period it has not missed a payment, as one would expect for a company increasing its dividend. These are all positive signs of a great, reliable dividend stock. Compared to its peers, goeasy produces a yield of 1.99%, which is on the low-side for specialty retail stocks.
What this means for you:
Are you a shareholder? With goeasy producing strong dividend income for your portfolio over the past few years, you can take comfort in knowing that this stock will still continue to be a robust dividend generator moving forward. However, depending on your current holdings, it may be beneficial exploring other dividend stocks to enhance your diversification, or even look at high-growth stocks to supplement your steady income stocks. I encourage you to continue your research by checking out my interactive free list of dividend rockstars as well as high-growth stocks to potentially add to your holdings.