Yahoo Finance Is Steamships Trading Company Limited (ASX:SST) 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, Steamships Trading Company Limited (ASX:SST) has paid dividends to shareholders, and these days it yields 2.1%. Does Steamships Trading tick all the boxes of a great dividend stock? Below, I’ll take you through my analysis.
View our latest analysis for Steamships Trading
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Here’s how I find good dividend stocks
If you are a dividend investor, you should always assess these five key metrics:
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?
Does earnings amply cover its dividend payments?
Will the company be able to keep paying dividend based on the future earnings growth?
How well does Steamships Trading fit our criteria?
The company currently pays out 164% of its earnings as a dividend, according to its trailing twelve-month data, which means that the dividend is not well-covered by its earnings. Furthermore, analysts have not forecasted a dividends per share for the future, which makes it hard to determine the yield shareholders should expect, and whether the current payout is sustainable, moving forward.
When thinking about whether a dividend is sustainable, another factor to consider is the cash flow. 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. Not only have dividend payouts from Steamships Trading fallen over the past 10 years, it has also been highly volatile during this time, with drops of over 25% in some years. This means that dividend hunters should probably steer clear of the stock, at least for now until the track record improves.
Relative to peers, Steamships Trading has a yield of 2.1%, which is on the low-side for Industrials stocks.
Next Steps:
Now you know to keep in mind the reason why investors should be careful investing in Steamships Trading for the dividend. But if you are not exclusively a dividend investor, the stock could still be an interesting investment opportunity. 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. I’ve put together three key aspects you should further research:
Future Outlook: What are well-informed industry analysts predicting for SST’s future growth? Take a look at our free research report of analyst consensus for SST’s outlook.
Valuation: What is SST 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 SST 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.
