Yahoo Finance Is Badger Daylighting Ltd. (TSE:BAD) A Great Dividend Stock?
Dividends can be underrated but they form a large part of investment returns, playing an important role in compounding returns in the long run. Historically, Badger Daylighting Ltd. (TSE:BAD) has paid dividends to shareholders, and these days it yields 1.5%. Let’s dig deeper into whether Badger Daylighting should have a place in your portfolio.
Check out our latest analysis for Badger Daylighting
Want to help shape the future of investing tools and platforms? Take the survey and be part of one of the most advanced studies of stock market investors to date.
5 checks you should use to assess a dividend stock
Whenever I am looking at a potential dividend stock investment, I always check these five metrics:
Is it paying an annual yield above 75% 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 its earnings sufficient to payout dividend at the current rate?
Will it have the ability to keep paying its dividends going forward?
How well does Badger Daylighting fit our criteria?
Badger Daylighting has a trailing twelve-month payout ratio of 24%, meaning the dividend is sufficiently covered by earnings. However, going forward, analysts expect BAD’s payout to fall to 21% of its earnings. Assuming a constant share price, this equates to a dividend yield of around 1.5%. However, EPS should increase to CA$2.09, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment.
When thinking about whether a dividend is sustainable, another factor to consider is the cash flow. 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. Whilst its per-share payments have increased during the past 10 years, there has been some hiccups. Shareholders would have seen a few years of reduced payments in this time.
In terms of its peers, Badger Daylighting has a yield of 1.5%, which is on the low-side for Construction stocks.
Next Steps:
If you are building an income portfolio, then Badger Daylighting 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, I recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. There are three important aspects you should look at:
Future Outlook: What are well-informed industry analysts predicting for BAD’s future growth? Take a look at our free research report of analyst consensus for BAD’s outlook.
Valuation: What is BAD 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 BAD 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.
