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If you are interested in cashing in on Empire Company Limited’s (TSE:EMP.A) upcoming dividend of CA$0.11 per share, you only have 4 days left to buy the shares before its ex-dividend date, 12 October 2018, in time for dividends payable on the 31 October 2018. Is this future income a persuasive enough catalyst for investors to think about Empire 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.

See our latest analysis for Empire

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 its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?

• Has dividend per share risen in the past couple of years?

• Is its earnings sufficient to payout dividend at the current rate?

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

Does Empire pass our checks?

The current trailing twelve-month payout ratio for the stock is 57%, which means that the dividend is covered by earnings. In the near future, analysts are predicting lower payout ratio of 24%, leading to a dividend yield of 2.0%.

When considering the sustainability of dividends, it is also worth checking the cash flow of a company. Companies with strong cash flow can sustain a higher payout ratio, while companies with weaker cash flow generally cannot.

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. In the case of EMP.A it has increased its DPS from CA$0.23 to CA$0.44 in the past 10 years. During this period it has not missed a payment, as one would expect for a company increasing its dividend. This is an impressive feat, which makes EMP.A a true dividend rockstar.

Relative to peers, Empire has a yield of 1.9%, which is high for Consumer Retailing stocks but still below the market’s top dividend payers.

Next Steps:

With these dividend metrics in mind, I definitely rank Empire as a strong income stock, and is worth further research for anyone who considers dividends an important part of their portfolio strategy. 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. Below, I’ve compiled three key aspects you should further examine: