Yahoo Finance ASX Limited (ASX:ASX): Ex-Dividend Is In 2 Days, Should You Buy?
Investors who want to cash in on ASX Limited’s (ASX:ASX) upcoming dividend of AU$1.09 per share have only 2 days left to buy the shares before its ex-dividend date, 06 September 2018, in time for dividends payable on the 26 September 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 ASX’s most recent financial data to examine its dividend characteristics in more detail.
See our latest analysis for ASX
5 checks you should use to assess a dividend stock
When assessing a stock as a potential addition to my dividend Portfolio, I look at these five areas:
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 dividend per share amount increased over the past?
Is is able to pay the current rate of dividends from its earnings?
Will it be able to continue to payout at the current rate in the future?
How does ASX fare?
The current trailing twelve-month payout ratio for ASX is 91.8%, which means that the dividend is not well-covered by its earnings. In the near future, analysts are predicting a more sensible payout ratio of 89.3%, leading to a dividend yield of 3.4%. Moreover, EPS should increase to A$2.49, 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. 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.
Compared to its peers, ASX generates a yield of 3.1%, which is on the low-side for Capital Markets stocks.
Next Steps:
Whilst there are few things you may like about ASX from a dividend stock perspective, the truth is that overall it probably is not the best choice for a dividend investor. 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. There are three key aspects you should look at:
Future Outlook: What are well-informed industry analysts predicting for ASX’s future growth? Take a look at our free research report of analyst consensus for ASX’s outlook.
Valuation: What is ASX 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 ASX is currently mispriced by the market.
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.