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Income Investors Should Know The Valener Inc (TSE:VNR) Ex-Dividend Date

Have you been keeping an eye on Valener Inc’s (TSE:VNR) upcoming dividend of CA$0.29 per share payable on the 15 October 2018? Then you only have 4 days left before the stock starts trading ex-dividend on the 27 September 2018. Is this future income a persuasive enough catalyst for investors to think about Valener as an investment today? Below, I’m going to look at the latest data and analyze the stock and its dividend property in further detail.

View our latest analysis for Valener

5 checks you should do on a dividend stock

When assessing a stock as a potential addition to my dividend Portfolio, I look at these five areas:

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  • 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 dividend per share risen in the past couple of years?

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

  • Based on future earnings growth, will it be able to continue to payout dividend at the current rate?

TSX:VNR Historical Dividend Yield September 22nd 18
TSX:VNR Historical Dividend Yield September 22nd 18

Does Valener pass our checks?

The company currently pays out 102% of its earnings as a dividend, according to its trailing twelve-month data, meaning the dividend is not sufficiently covered by its earnings. However, going forward, analysts expect VNR’s payout to fall into a more sustainable range of 85.1% of its earnings, which leads to a dividend yield of 6.3%. In addition to this, EPS should increase to CA$1.31, 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.

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. The reality is that it is too early to consider Valener 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.

Relative to peers, Valener has a yield of 6.0%, which is high for Gas Utilities stocks.

Next Steps:

Whilst there are few things you may like about Valener from a dividend stock perspective, the truth is that overall it probably is not the best choice for a dividend investor. 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. There are three pertinent aspects you should look at:

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

  2. Valuation: What is VNR 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 VNR 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 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.