Important news for shareholders and potential investors in Consort Medical plc (LON:CSRT): The dividend payment of UK£0.14 per share will be distributed to shareholders on 26 October 2018, and the stock will begin trading ex-dividend at an earlier date, 27 September 2018. Is this future income stream a compelling catalyst for dividend investors to think about the stock as an investment today? Let’s take a look at Consort Medical’s most recent financial data to examine its dividend characteristics in more detail.
See our latest analysis for Consort Medical
5 checks you should use to assess 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 paying an annual yield above 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 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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Will it be able to continue to payout at the current rate in the future?
How well does Consort Medical fit our criteria?
Consort Medical has a trailing twelve-month payout ratio of 63.9%, meaning the dividend is sufficiently covered by earnings. However, going forward, analysts expect CSRT’s payout to fall to 30.7% of its earnings, which leads to a dividend yield of around 1.9%. However, EPS should increase to £0.48, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment.
When considering the sustainability of dividends, it is also worth checking the cash flow of a company. A business with strong cash flow can sustain a higher divided payout ratio than a company with weak cash flow.
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 CSRT it has increased its DPS from £0.19 to £0.21 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 CSRT a true dividend rockstar.
Compared to its peers, Consort Medical has a yield of 1.7%, which is on the low-side for Medical Equipment stocks.
Next Steps:
Taking into account the dividend metrics, Consort Medical ticks most of the boxes as a strong dividend investment, putting it in my list of top dividend payers. 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. There are three essential factors you should look at: