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Have you been keeping an eye on Rotork plc’s (LON:ROR) upcoming dividend of UK£0.022 per share payable on the 21 September 2018? Then you only have 2 days left before the stock starts trading ex-dividend on the 23 August 2018. Is this future income stream a compelling catalyst for dividend investors to think about the stock as an investment today? Let’s take a look at Rotork’s most recent financial data to examine its dividend characteristics in more detail.
View our latest analysis for Rotork
How I analyze a dividend stock
When researching a dividend stock, I always follow the following screening criteria:
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Does it pay an annual yield higher than 75% of dividend payers?
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Does it consistently pay out dividends without missing a payment of significantly cutting payout?
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Has dividend per share amount increased over the past?
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Is is able to pay the current rate of dividends from its earnings?
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Will it be able to continue to payout at the current rate in the future?
Does Rotork pass our checks?
Rotork has a trailing twelve-month payout ratio of 81.14%, which means that the dividend is covered by earnings. In the near future, analysts are predicting lower payout ratio of 44.96%, leading to a dividend yield of around 1.92%. However, EPS should increase to £0.11, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment.
If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. Whilst its per-share payments have increased during the past 10 years, there has been some hiccups. Shareholders would have seen a few years of reduced payments in this time.
Relative to peers, Rotork produces a yield of 1.69%, which is on the low-side for Machinery stocks.
Next Steps:
Taking all the above into account, Rotork 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. Given that this is purely a dividend analysis, 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. I’ve put together three fundamental factors you should look at:
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Future Outlook: What are well-informed industry analysts predicting for ROR’s future growth? Take a look at our free research report of analyst consensus for ROR’s outlook.
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Valuation: What is ROR 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 ROR is currently mispriced by the market.
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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.