Attention dividend hunters! Mainfreight Limited (NZSE:MFT) will be distributing its dividend of NZ$0.22 per share in 5 days time, on the 15 December 2017, and will start trading ex-dividend on the 07 December 2017. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I examine MFT’s latest financial data to analyse its dividend characteristics. Check out our latest analysis for Mainfreight
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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Does it pay an annual yield higher than 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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Does earnings amply cover its dividend payments?
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Will it have the ability to keep paying its dividends going forward?
How well does Mainfreight fit our criteria?
The company currently pays out 42.50% of its earnings as a dividend, which means that the dividend is covered by earnings. Going forward, analysts expect MFT’s payout to remain around the same level at 40.49% of its earnings, which leads to a dividend yield of 2.09%. Moreover, EPS should increase to NZ$1.18. 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. MFT has increased its DPS from NZ$0.16 to NZ$0.41 in the past 10 years. It has also been paying out dividend consistently during this time, as you’d expect for a company increasing its dividend levels. These are all positive signs of a great, reliable dividend stock. Relative to peers, MFT generates a yield of 1.74%, which is high for air freight and logistics stocks but still below the low risk savings rate.
What this means for you:
Are you a shareholder?
Are you a shareholder? With Mainfreight 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 portfolio composition, it may be valuable exploring other income stocks to increase diversification, or even look at high-growth stocks to supplement your steady income stocks. I suggest continuing your research by exploring my interactive free list of dividend rockstars as well as high-growth stocks to potentially add to your holdings.
Are you a potential investor? With these dividend metrics in mind, I definitely rank Mainfreight as a strong income stock, and is worth further research for anyone who considers dividends an important part of their portfolio strategy. As with all investments, 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. No matter how much of a cash cow Mainfreight is, it is not worth an infinite price. Is Mainfreight overvalued or is it actually a bargain? Take a look at our latest free analysis to find out!
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.