Should Income Investors Buy Ardent Leisure Group (ASX:AAD) Before Its Ex-Dividend?

Have you been keeping an eye on Ardent Leisure Group’s (ASX:AAD) upcoming dividend of AU$0.065 per share payable on the 31 August 2018? Then you only have 2 days left before the stock starts trading ex-dividend on the 25 June 2018. Should you diversify into Ardent Leisure Group and boost your portfolio income stream? Well, keep on reading because today, I’m going to look at the latest data and analyze the stock and its dividend property in further detail. View out our latest analysis for Ardent Leisure Group

Here’s how I find good dividend stocks

If you are a dividend investor, you should always assess these five key metrics:

• Is it the top 25% annual dividend yield payer?

• Does it consistently pay out dividends without missing a payment of significantly cutting payout?

• Has the amount of dividend per share grown over the past?

• Is is able to pay the current rate of dividends from its earnings?

• Will the company be able to keep paying dividend based on the future earnings growth?

ASX:AAD Historical Dividend Yield June 22nd 18

How well does Ardent Leisure Group fit our criteria?

The current payout ratio for AAD is negative, meaning that the company is not yet profitable and is paying dividend by dipping into its retained earnings.

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. Not only have dividend payouts from Ardent Leisure Group 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.

Compared to its peers, Ardent Leisure Group has a yield of 4.23%, which is high for Hospitality stocks but still below the market’s top dividend payers.

Next Steps:

Now you know to keep in mind the reason why investors should be careful investing in Ardent Leisure Group for the dividend. On the other hand, if you are not strictly just a dividend investor, the stock could still be offering some interesting investment opportunities. 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 fundamental aspects you should further examine:

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

2. Valuation: What is AAD 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 AAD 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.