Yahoo Finance Should Beacon Lighting Group Limited (ASX:BLX) Be Part Of Your Dividend Portfolio?
Dividends play a key role in compounding returns over time and can form a large part of our portfolio return. In the last few years Beacon Lighting Group Limited (ASX:BLX) has paid a dividend to shareholders. Today it yields 3.2%. Does Beacon Lighting Group tick all the boxes of a great dividend stock? Below, I’ll take you through my analysis.
View our latest analysis for Beacon Lighting Group
5 checks you should do on a dividend stock
When assessing a stock as a potential addition to my dividend Portfolio, I look at these five areas:
Is their annual yield among the top 25% of dividend payers?
Has it paid dividend every year without dramatically reducing payout in the past?
Has it increased its dividend per share amount over the past?
Does earnings amply cover its dividend payments?
Will the company be able to keep paying dividend based on the future earnings growth?
How does Beacon Lighting Group fare?
Beacon Lighting Group has a trailing twelve-month payout ratio of 55%, meaning the dividend is sufficiently covered by earnings. Going forward, analysts expect BLX’s payout to remain around the same level at 52% of its earnings, which leads to a dividend yield of 3.8%. Furthermore, EPS should increase to A$0.098.
If you want to dive deeper into the sustainability of a certain payout ratio, you may wish to consider the cash flow of the business. A business with strong cash flow can sustain a higher divided payout ratio than a company with weak cash flow.
If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. The reality is that it is too early to consider Beacon Lighting Group as a dividend investment. It has only been consistently paying dividends for 4 years, however, standard practice for reliable payers is to look for a 10-year minimum track record.
Relative to peers, Beacon Lighting Group has a yield of 3.2%, which is on the low-side for Specialty Retail stocks.
Next Steps:
If you are building an income portfolio, then Beacon Lighting Group is a complicated choice since it has some positive aspects as well as negative ones. However, if you are not strictly just a dividend investor, the stock could still offer some interesting investment opportunities. 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 key aspects you should look at:
Future Outlook: What are well-informed industry analysts predicting for BLX’s future growth? Take a look at our free research report of analyst consensus for BLX’s outlook.
Valuation: What is BLX 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 BLX 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.
