In This Article:
Sonic Healthcare Limited (ASX:SHL) has pleased shareholders over the past 10 years, paying out an average dividend of 4.00% annually. The stock currently pays out a dividend yield of 3.33%, and has a market cap of AU$9.94B. Should it have a place in your portfolio? Let’s take a look at Sonic Healthcare in more detail. View our latest analysis for Sonic Healthcare
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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Has it paid dividend every year without dramatically reducing payout in the past?
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Has the amount of dividend per share grown over the past?
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Is its earnings sufficient to payout dividend at the current rate?
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Will the company be able to keep paying dividend based on the future earnings growth?
How well does Sonic Healthcare fit our criteria?
The current trailing twelve-month payout ratio for the stock is 71.17%, meaning the dividend is sufficiently covered by earnings. Going forward, analysts expect SHL’s payout to remain around the same level at 72.44% of its earnings, which leads to a dividend yield of around 3.72%. Furthermore, EPS should increase to A$1.19. If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. In the case of SHL it has increased its DPS from A$0.49 to A$0.78 in the past 10 years. During this period it has not missed a payment, as one would expect for a company increasing its dividend. These are all positive signs of a great, reliable dividend stock. In terms of its peers, Sonic Healthcare generates a yield of 3.33%, which is high for Healthcare stocks but still below the market’s top dividend payers.
Next Steps:
With these dividend metrics in mind, I definitely rank Sonic Healthcare 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, I recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. I’ve put together three relevant aspects you should further examine:
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Future Outlook: What are well-informed industry analysts predicting for SHL’s future growth? Take a look at our free research report of analyst consensus for SHL’s outlook.
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Valuation: What is SHL 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 SHL is currently mispriced by the market.
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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 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.