Yahoo Finance Is Blackmores Limited (ASX:BKL) A Smart Pick For Income Investors?
A sizeable part of portfolio returns can be produced by dividend stocks due to their contribution to compounding returns in the long run. Historically, Blackmores Limited (ASX:BKL) has paid dividends to shareholders, and these days it yields 1.8%. Does Blackmores tick all the boxes of a great dividend stock? Below, I’ll take you through my analysis.
View our latest analysis for Blackmores
How I analyze a dividend stock
Whenever I am looking at a potential dividend stock investment, I always check these five metrics:
Is it paying an annual yield above 75% 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?
Can it afford to pay the current rate of dividends from its earnings?
Will the company be able to keep paying dividend based on the future earnings growth?
How well does Blackmores fit our criteria?
The company currently pays out 77.2% of its earnings as a dividend, according to its trailing twelve-month data, meaning the dividend is sufficiently covered by earnings. Going forward, analysts expect BKL’s payout to remain around the same level at 79.0% of its earnings, which leads to a dividend yield of 2.6%. In addition to this, EPS should increase to A$4.42.
If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. 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.
In terms of its peers, Blackmores generates a yield of 1.8%, which is on the low-side for Personal Products stocks.
Next Steps:
Whilst there are few things you may like about Blackmores from a dividend stock perspective, the truth is that overall it probably is not the best choice for a dividend investor. 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, 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 essential factors you should further examine:
Future Outlook: What are well-informed industry analysts predicting for BKL’s future growth? Take a look at our free research report of analyst consensus for BKL’s outlook.
Valuation: What is BKL 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 BKL 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.
