Have you been keeping an eye on KCOM Group PLC’s (LSE:KCOM) upcoming dividend of £0.02 per share payable on the 09 February 2018? Then you only have 3 days left before the stock starts trading ex-dividend on the 28 December 2017. What does this mean for current shareholders and potential investors? Below, I will explain how holding KCOM Group can impact your portfolio income stream, by analysing the stock’s most recent financial data and dividend attributes. Check out our latest analysis for KCOM Group
5 checks you should do on 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 the top 25% annual dividend yield payer?
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Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?
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Has dividend per share risen in the past couple of years?
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Can it afford to pay the current rate of dividends from its earnings?
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Will it have the ability to keep paying its dividends going forward?
How well does KCOM Group fit our criteria?
KCOM Group has a payout ratio of 127.96%, meaning the dividend is not sufficiently covered by its earnings. In the near future, analysts are predicting a payout ratio of 124.30%, leading to a dividend yield of 6.67%. Furthermore, EPS is forecasted to fall to £0.04 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. Although KCOM’s per share payments have increased in the past 10 years, it has not been a completely smooth ride. Investors have seen reductions in the dividend per share in the past, although, it has picked up again. Relative to peers, KCOM Group has a yield of 6.63%, which is high for telecom stocks.
What this means for you:
Are you a shareholder? If KCOM Group is in your portfolio for cash-generating reasons, there may be better alternatives out there. It may be beneficial exploring other income stocks as alternatives to KCOM Group or even look at high-growth stocks to supplement your steady income stocks. I encourage you to continue your research by checking out my interactive free list of dividend rockstars as well as high-growth stocks to potentially add to your holdings.
Are you a potential investor? Taking all the above into account, KCOM Group is a complicated pick for dividend investors given that there are a couple of positive things about it as well as negative. However, if you are not strictly just a dividend investor, the stock could still offer some interesting investment opportunities. I also recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. Check our latest free fundmental analysis to explore other aspects of KCOM Group.
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.