Does Viacom Inc (NASDAQ:VIAB) Have A Place In Your Portfolio?

Dividends play an important role in compounding returns in the long run and end up forming a sizeable part of investment returns. Viacom Inc (NASDAQ:VIAB) has returned to shareholders over the past 8 years, an average dividend yield of 2.00% annually. Does Viacom tick all the boxes of a great dividend stock? Below, I’ll take you through my analysis. View out our latest analysis for Viacom

5 checks you should do on a dividend stock

When researching a dividend stock, I always follow the following screening criteria:

• Is its annual yield among the top 25% of dividend-paying companies?

• 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?

• Can it afford to pay the current rate of dividends from its earnings?

• Will it be able to continue to payout at the current rate in the future?

NasdaqGS:VIAB Historical Dividend Yield June 22nd 18

Does Viacom pass our checks?

Viacom has a trailing twelve-month payout ratio of 15.01%, which means that the dividend is covered by earnings. In the near future, analysts are predicting a higher payout ratio of 22.19%, leading to a dividend yield of around 2.84%. However, EPS is forecasted to fall to $4.17 in the upcoming year. Therefore, although payout is expected to increase, the fall in earnings may not equate to higher dividend income.

If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. The reality is that it is too early to consider Viacom as a dividend investment. It has only been consistently paying dividends for 8 years, however, standard practice for reliable payers is to look for a 10-year minimum track record.

In terms of its peers, Viacom has a yield of 2.73%, which is high for Media stocks but still below the market’s top dividend payers.

Next Steps:

Taking all the above into account, Viacom is a complicated pick for dividend investors given that there are a couple of positive things about it as well as negative. 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, I recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. I’ve put together three relevant aspects you should further examine:

1. Future Outlook: What are well-informed industry analysts predicting for VIAB’s future growth? Take a look at our free research report of analyst consensus for VIAB’s outlook.

2. Valuation: What is VIAB 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 VIAB is currently mispriced by the market.

3. 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 pass 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.