Yahoo Finance Only 2 Days Left Before W.W. Grainger, Inc. (NYSE:GWW) Will Be Trading Ex-Dividend
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Shares of W.W. Grainger, Inc. (NYSE:GWW) will begin trading ex-dividend in 2 days. To qualify for the dividend check of US$1.44 per share, investors must have owned the shares prior to 10 May 2019, which is the last day the company's management will finalize their list of shareholders to which they will send dividend payments. What does this mean for current shareholders and potential investors? Below, I will explain how holding W.W. Grainger can impact your portfolio income stream, by analysing the stock's most recent financial data and dividend attributes.
See our latest analysis for W.W. Grainger
5 questions to ask before buying a dividend stock
Whenever I am looking at a potential dividend stock investment, I always check these five metrics:
Is their annual yield among the top 25% of dividend payers?
Has it consistently paid a stable dividend without missing a payment or drastically cutting payout?
Has it increased its dividend per share amount over the past?
Is is able 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 W.W. Grainger fit our criteria?
The company currently pays out 38% of its earnings as a dividend, according to its trailing twelve-month data, meaning the dividend is sufficiently covered by earnings. However, going forward, analysts expect GWW's payout to fall to 30% of its earnings. Assuming a constant share price, this equates to a dividend yield of around 2.2%. However, EPS should increase to $18.41, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment.
When considering the sustainability of dividends, it is also worth checking the cash flow of a company. Companies with strong cash flow can sustain a higher payout ratio, while companies with weaker cash flow generally cannot.
If there is one thing that you want to be reliable in your life, it's dividend stocks and their constant income stream. In the case of GWW it has increased its DPS from $1.84 to $5.76 in the past 10 years. It has also been paying out dividend consistently during this time, as you'd expect for a company increasing its dividend levels. These are all positive signs of a great, reliable dividend stock.
In terms of its peers, W.W. Grainger has a yield of 2.1%, which is on the low-side for Trade Distributors stocks.
Next Steps:
With this in mind, I definitely rank W.W. Grainger 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 recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. Below, I've compiled three important aspects you should further research:
Future Outlook: What are well-informed industry analysts predicting for GWW’s future growth? Take a look at our free research report of analyst consensus for GWW’s outlook.
Valuation: What is GWW 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 GWW 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.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
