Investors who want to cash in on XL Group Ltd’s (NYSE:XL) upcoming dividend of $0.22 per share have only 2 days left to buy the shares before its ex-dividend date, 14 December 2017, in time for dividends payable on the 02 January 2018. Should you diversify into XL and boost your portfolio income stream? Well, keep on reading because today, 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 XL
5 questions to ask before buying a dividend stock
If you are a dividend investor, you should always assess these five key metrics:
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Is their annual yield among the top 25% 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 risen in the past couple of years?
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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?
How well does XL Group fit our criteria?
XL Group has a negative payout ratio, which means that it is loss-making, and paying its dividend from its retained earnings. 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. Not only have dividend payouts from XL Group fallen over the past 10 years, it has also been highly volatile during this time, with drops of over 25% in some years. These characteristics do not bode well for income investors seeking reliable stream of dividends. In terms of its peers, XL generates a yield of 2.39%, which is on the low-side for insurance stocks.
What this means for you:
Are you a shareholder? Investors may not have the best feeling about their investment in XL right now, in terms of its dividend attributes. It may be valuable exploring other dividend stocks as alternatives to XL or even look at high-growth stocks to complement your steady income stocks. I recommend continuing your research by taking a look at my interactive free list of dividend rockstars as well as high-growth stocks to potentially add to your holdings.
Are you a potential investor? Now you know to keep in mind the reason why investors should be careful investing in XL for the dividend. On the other hand, if you are not strictly just a dividend investor, XL could still be offering some interesting investment opportunities. As always, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. Dig deeper in our latest free fundmental analysis to explore other aspects of XL.
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.