Investors who want to cash in on Pets at Home Group Plc’s (LSE:PETS) upcoming dividend of £0.03 per share have only 3 days left to buy the shares before its ex-dividend date, 07 December 2017, in time for dividends payable on the 12 January 2018. Is this future income a persuasive enough catalyst for investors to think about PETS 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. View our latest analysis for Pets at Home Group
How I analyze a dividend stock
When researching a dividend stock, I always follow the following screening criteria:
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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 dividend per share risen in the past couple of years?
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Does earnings amply cover its dividend payments?
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Will the company be able to keep paying dividend based on the future earnings growth?
Does Pets at Home Group pass our checks?
Pets at Home Group has a payout ratio of 52.31%, meaning the dividend is sufficiently covered by earnings. Going forward, analysts expect PETS’s payout to remain around the same level at 55.10% of its earnings, which leads to a dividend yield of around 4.52%. Moreover, EPS is forecasted to fall to £0.14 in the upcoming year. 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. Unfortunately, it is really too early to view Pets at Home Group as a dividend investment. It has only been consistently paying dividends for 3 years, however, standard practice for reliable payers is to look for a 10-year minimum track record. Compared to its peers, Pets at Home Group produces a yield of 4.46%, which is high for specialty retail stocks.
What this means for you:
Are you a shareholder?
Are you a shareholder? Investors of Pets at Home Group can continue to expect strong dividends from the stock moving forward. With its favorable dividend characteristics, PETS is one worth keeping around in your income portfolio. However, depending on your current holdings, it may be worth exploring other dividend stocks to increase diversification, or even look at high-growth stocks to supplement your steady income stocks. I recommend 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 Pets at Home Group as a strong income stock, and is worth further research for anyone who considers dividends an important part of their portfolio strategy. I also recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. Whether or not you like PETS as a dividend stock, it’s still worth checking the price tag. Can you buy PETS for a great price? Check 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.