2 Days Left To GWA Group Limited (ASX:GWA)’s Ex-Dividend Date, Should You Buy?

Important news for shareholders and potential investors in GWA Group Limited (ASX:GWA): The dividend payment of AU$0.095 per share will be distributed into shareholder on 06 September 2018, and the stock will begin trading ex-dividend at an earlier date, 27 August 2018. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I examine GWA Group’s latest financial data to analyse its dividend characteristics.

View our latest analysis for GWA Group

5 questions I ask before picking a dividend stock

If you are a dividend investor, you should always assess these five key metrics:

• Is it paying an annual yield above 75% of dividend payers?

• Does it consistently pay out dividends without missing a payment of significantly cutting payout?

• Has it increased its dividend per share amount over the past?

• Does earnings amply cover its dividend payments?

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

ASX:GWA Historical Dividend Yield August 24th 18

Does GWA Group pass our checks?

The company currently pays out 94.76% of its earnings as a dividend, according to its trailing twelve-month data, meaning the dividend is not sufficiently covered by its earnings. However, going forward, analysts expect GWA’s payout to fall into a more sustainable range of 86.90% of its earnings, which leads to a dividend yield of around 4.89%. Moreover, EPS should increase to A$0.19, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment.

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. Dividend payments from GWA Group have been volatile in the past 10 years, with some years experiencing significant drops of over 25%. These characteristics do not bode well for income investors seeking reliable stream of dividends.

Compared to its peers, GWA Group generates a yield of 5.14%, which is high for Building stocks but still below the market’s top dividend payers.

Next Steps:

Now you know to keep in mind the reason why investors should be careful investing in GWA Group for the dividend. But if you are not exclusively a dividend investor, the stock could still be an interesting investment opportunity. 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 aspects you should look at:

1. Future Outlook: What are well-informed industry analysts predicting for GWA’s future growth? Take a look at our free research report of analyst consensus for GWA’s outlook.

2. Valuation: What is GWA 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 GWA is currently mispriced by the market.

3. 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.