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On the 20 September 2018, Ramsdens Holdings PLC (LON:RFX) will be paying shareholders an upcoming dividend amount of UK£0.044 per share. However, investors must have bought the company’s stock before 23 August 2018 in order to qualify for the payment. That means you have only 2 days left! Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I examine Ramsdens Holdings’s latest financial data to analyse its dividend characteristics.

Check out our latest analysis for Ramsdens Holdings

5 checks you should use to assess 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 it consistently paid a stable dividend without missing a payment or drastically cutting payout?

• Has it increased its dividend per share amount over the past?

• Is is able to pay the current rate of dividends from its earnings?

• Will it have the ability to keep paying its dividends going forward?

Does Ramsdens Holdings pass our checks?

Ramsdens Holdings has a trailing twelve-month payout ratio of 40.43%, which means that the dividend is covered by earnings. In the near future, analysts are predicting a payout ratio of 42.53%, leading to a dividend yield of 4.31%.

Reliablity is an important factor for dividend stocks, particularly for income investors who want a strong track record of payment and a positive outlook for future payout. The reality is that it is too early to consider Ramsdens Holdings as a dividend investment. Last year was the company’s first dividend payment, so it is certainly early days. The standard practice for reliable payers is to look for 10 or so years of track record.

Compared to its peers, Ramsdens Holdings generates a yield of 5.06%, which is high for Consumer Finance stocks.

Next Steps:

Keeping in mind the dividend characteristics above, Ramsdens Holdings is definitely worth considering for investors 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 relevant factors you should further research:

1. Future Outlook: What are well-informed industry analysts predicting for RFX’s future growth? Take a look at our free research report of analyst consensus for RFX’s outlook.

2. Valuation: What is RFX worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether RFX is currently mispriced by the market.

3. Other Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.

To help readers see past 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. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.