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Have you been keeping an eye on Shaver Shop Group Limited’s (ASX:SSG) upcoming dividend of AU$0.024 per share payable on the 31 October 2018? Then you only have 4 days left before the stock starts trading ex-dividend on the 16 October 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 Shaver Shop Group’s most recent financial data to examine its dividend characteristics in more detail.

See our latest analysis for Shaver Shop Group

5 checks you should use to assess a dividend stock

If you are a dividend investor, you should always assess these five key metrics:

• Is their annual yield among the top 25% of dividend payers?

• Has it paid dividend every year without dramatically reducing payout in the past?

• Has the amount of dividend per share grown over the past?

• Does earnings amply cover its dividend payments?

• Will the company be able to keep paying dividend based on the future earnings growth?

How well does Shaver Shop Group fit our criteria?

The company currently pays out 79% of its earnings as a dividend, according to its trailing twelve-month data, which means that the dividend is covered by earnings. In the near future, analysts are predicting lower payout ratio of 67%, leading to a dividend yield of around 9.3%. Moreover, EPS is also forecasted to fall to A$0.053 in the upcoming year. The lower EPS on top of a lower payout ratio will lead to a fall in dividend payment moving forward.

When thinking about whether a dividend is sustainable, another factor to consider is the cash flow. 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. Unfortunately, it is really too early to view Shaver Shop Group as a dividend investment. It has only been consistently paying dividends for 2 years, however, standard practice for reliable payers is to look for a 10-year minimum track record.

Compared to its peers, Shaver Shop Group generates a yield of 9.1%, which is high for Specialty Retail stocks.

Next Steps:

Keeping in mind the dividend characteristics above, Shaver Shop Group is definitely worth considering for investors looking to build a dedicated income portfolio. Given that this is purely a dividend analysis, you should always research extensively before deciding whether or not a stock is an appropriate investment for you. I always recommend analysing the company’s fundamentals and underlying business before making an investment decision. There are three important aspects you should further examine: