Yahoo Finance Is SKYCITY Entertainment Group Limited (NZSE:SKC) An Attractive Dividend Stock?
Dividends play a key role in compounding returns over time and can form a large part of our portfolio return. Historically, SKYCITY Entertainment Group Limited (NZSE:SKC) has paid dividends to shareholders, and these days it yields 4.9%. Should it have a place in your portfolio? Let’s take a look at SKYCITY Entertainment Group in more detail.
View our latest analysis for SKYCITY Entertainment Group
How I analyze a dividend stock
If you are a dividend investor, you should always assess these five key metrics:
Is its annual yield among the top 25% of dividend-paying companies?
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?
Does earnings amply cover its dividend payments?
Based on future earnings growth, will it be able to continue to payout dividend at the current rate?
How well does SKYCITY Entertainment Group fit our criteria?
SKYCITY Entertainment Group has a trailing twelve-month payout ratio of 78.9%, meaning the dividend is sufficiently covered by earnings. Going forward, analysts expect SKC’s payout to remain around the same level at 86.4% of its earnings, which leads to a dividend yield of 5.0%. Furthermore, EPS should increase to NZ$0.25.
When assessing the forecast sustainability of a dividend it is also worth considering the cash flow of the business. Cash flow is important because companies with strong cash flow can usually sustain higher payout ratios.
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. Dividend payments from SKYCITY Entertainment Group have been volatile in the past 10 years, with some years experiencing significant drops of over 25%. This means that dividend hunters should probably steer clear of the stock, at least for now until the track record improves.
Relative to peers, SKYCITY Entertainment Group produces a yield of 4.9%, which is high for Hospitality stocks but still below the market’s top dividend payers.
Next Steps:
If you are building an income portfolio, then SKYCITY Entertainment 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, 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 important aspects you should further examine:
Future Outlook: What are well-informed industry analysts predicting for SKC’s future growth? Take a look at our free research report of analyst consensus for SKC’s outlook.
Valuation: What is SKC 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 SKC 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.
