In This Article:
Have you been keeping an eye on ECO Animal Health Group plc’s (LON:EAH) upcoming dividend of UK£0.06 per share payable on the 17 October 2018? Then you only have 4 days left before the stock starts trading ex-dividend on the 27 September 2018. Is this future income a persuasive enough catalyst for investors to think about ECO Animal Health Group as an investment today? Below, 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 ECO Animal Health Group
How I analyze a dividend stock
When researching a dividend stock, I always follow the following screening criteria:
-
Is it the top 25% annual dividend yield payer?
-
Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?
-
Has it increased its dividend per share amount over the past?
-
Can it afford to pay the current rate of dividends from its earnings?
-
Will it be able to continue to payout at the current rate in the future?
Does ECO Animal Health Group pass our checks?
ECO Animal Health Group has a trailing twelve-month payout ratio of 64.8%, meaning the dividend is sufficiently covered by earnings. However, going forward, analysts expect EAH’s payout to fall to 43.1% of its earnings, which leads to a dividend yield of around 2.2%. However, EPS should increase to £0.17, 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. Cash flow is important because companies with strong cash flow can usually sustain higher payout ratios.
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. 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, ECO Animal Health Group has a yield of 1.9%, which is on the low-side for Pharmaceuticals stocks.
Next Steps:
Considering the dividend attributes we analyzed above, ECO Animal Health Group is definitely worth keeping an eye on for someone 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 key factors you should further research: