Investors who want to cash in on Hardwoods Distribution Inc’s (TSE:HDI) upcoming dividend of CA$0.08 per share have only 4 days left to buy the shares before its ex-dividend date, 12 October 2018, in time for dividends payable on the 26 October 2018. What does this mean for current shareholders and potential investors? Below, I will explain how holding Hardwoods Distribution can impact your portfolio income stream, by analysing the stock’s most recent financial data and dividend attributes.
View our latest analysis for Hardwoods Distribution
5 questions I ask before picking 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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Based on future earnings growth, will it be able to continue to payout dividend at the current rate?
How well does Hardwoods Distribution fit our criteria?
The current trailing twelve-month payout ratio for the stock is 20%, which means that the dividend is covered by earnings. In the near future, analysts are predicting lower payout ratio of 17%, leading to a dividend yield of 2.0%. However, EPS should increase to CA$1.75, 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 there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. Although HDI’s per share payments have increased in the past 10 years, it has not been a completely smooth ride. Shareholders would have seen a few years of reduced payments in this time.
Compared to its peers, Hardwoods Distribution has a yield of 2.0%, which is on the low-side for Trade Distributors stocks.
Next Steps:
Considering the dividend attributes we analyzed above, Hardwoods Distribution 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. There are three essential aspects you should further research: