Yahoo Finance Only 4 Days Left Before Sonic Healthcare Limited (ASX:SHL) Will Be Trading Ex-Dividend,
Have you been keeping an eye on Sonic Healthcare Limited’s (ASX:SHL) upcoming dividend of AU$0.49 per share payable on the 27 September 2018? Then you only have 4 days left before the stock starts trading ex-dividend on the 12 September 2018. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I examine Sonic Healthcare’s latest financial data to analyse its dividend characteristics.
View our latest analysis for Sonic Healthcare
5 checks you should do on a dividend stock
When researching a dividend stock, I always follow the following screening criteria:
Does it pay an annual yield higher than 75% of dividend payers?
Does it consistently pay out dividends without missing a payment of significantly cutting payout?
Has it increased its dividend per share amount over the past?
Does earnings amply cover its dividend payments?
Will it be able to continue to payout at the current rate in the future?
How does Sonic Healthcare fare?
The current trailing twelve-month payout ratio for the stock is 71.9%, which means that the dividend is covered by earnings. Going forward, analysts expect SHL’s payout to remain around the same level at 72.9% of its earnings, which leads to a dividend yield of around 3.7%. In addition to this, EPS should increase to A$1.16.
When assessing the forecast sustainability of a dividend it is also worth considering the cash flow of the business. Companies with strong cash flow can sustain a higher payout ratio, while companies with weaker cash flow generally cannot.
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. In the case of SHL it has increased its DPS from A$0.52 to A$0.81 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.
Relative to peers, Sonic Healthcare generates a yield of 3.2%, which is on the low-side for Healthcare stocks.
Next Steps:
Keeping in mind the dividend characteristics above, Sonic Healthcare is definitely worth considering for investors looking to build a dedicated income 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 relevant factors you should further research:
Future Outlook: What are well-informed industry analysts predicting for SHL’s future growth? Take a look at our free research report of analyst consensus for SHL’s outlook.
Valuation: What is SHL 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 SHL 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 editorial-team@simplywallst.com.
