Important news for shareholders and potential investors in Bemis Company Inc (NYSE:BMS): The dividend payment of US$0.31 per share will be distributed into shareholder on 04 September 2018, and the stock will begin trading ex-dividend at an earlier date, 15 August 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 Bemis Company’s most recent financial data to examine its dividend characteristics in more detail.
5 checks you should do on a dividend stock
When researching a dividend stock, I always follow the following screening criteria:
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 the amount of dividend per share grown over the past?
Is is able to pay the current rate of dividends from its earnings?
Based on future earnings growth, will it be able to continue to payout dividend at the current rate?
How well does Bemis Company fit our criteria?
Bemis Company has a trailing twelve-month payout ratio of 101.55%, meaning the dividend is not sufficiently covered by its earnings. However, going forward, analysts expect BMS’s payout to fall into a more sustainable range of 41.35% of its earnings, which leads to a dividend yield of around 2.60%. Moreover, EPS should increase to $2.72, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment.
If dividend is a key criteria in your investment consideration, then you need to make sure the dividend stock you’re eyeing out is reliable in its payments. In the case of BMS it has increased its DPS from $0.88 to $1.24 in the past 10 years. During this period it has not missed a payment, as one would expect for a company increasing its dividend. These are all positive signs of a great, reliable dividend stock.
Compared to its peers, Bemis Company generates a yield of 2.49%, which is on the low-side for Packaging stocks.
With this in mind, I definitely rank Bemis Company as a strong dividend stock, and makes it worth further research for anyone who likes steady income generation from their portfolio. Given that this is purely a dividend analysis, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. There are three pertinent aspects you should look at:
Future Outlook: What are well-informed industry analysts predicting for BMS’s future growth? Take a look at our free research report of analyst consensus for BMS’s outlook.
Valuation: What is BMS 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 BMS is currently mispriced by the market.
Other 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 email@example.com.