Yahoo Finance Should Ströer SE & Co KGaA (FRA:SAX) Be Part Of Your Dividend Portfolio?
Dividends play an important role in compounding returns in the long run and end up forming a sizeable part of investment returns. Historically, Ströer SE & Co KGaA (FRA:SAX) has paid a dividend to shareholders. It currently yields 2.7%. Does Ströer SE KGaA tick all the boxes of a great dividend stock? Below, I’ll take you through my analysis.
See our latest analysis for Ströer SE KGaA
5 questions I ask before picking a dividend stock
Whenever I am looking at a potential dividend stock investment, I always check these five metrics:
Is it the top 25% annual dividend yield payer?
Has it consistently paid a stable dividend without missing a payment or drastically cutting payout?
Has it increased its dividend per share amount over the past?
Is is able 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?
Does Ströer SE KGaA pass our checks?
The company currently pays out 78% of its earnings as a dividend, according to its trailing twelve-month data, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting lower payout ratio of 41%, leading to a dividend yield of around 3.3%. However, EPS should increase to €2.46, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment.
If you want to dive deeper into the sustainability of a certain payout ratio, you may wish to consider the cash flow of the business. 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. The reality is that it is too early to consider Ströer SE KGaA as a dividend investment. It has only been consistently paying dividends for 5 years, however, standard practice for reliable payers is to look for a 10-year minimum track record.
Compared to its peers, Ströer SE KGaA produces a yield of 2.7%, which is on the low-side for Media stocks.
Next Steps:
Taking all the above into account, Ströer SE KGaA 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, 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 fundamental aspects you should further research:
Future Outlook: What are well-informed industry analysts predicting for SAX’s future growth? Take a look at our free research report of analyst consensus for SAX’s outlook.
Valuation: What is SAX 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 SAX 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.
