Have you been keeping an eye on KBC Group NV’s (EBR:KBC) upcoming dividend of €0.70 per share payable on the 16 November 2018? Then you only have 3 days left before the stock starts trading ex-dividend on the 14 November 2018. Is this future income a persuasive enough catalyst for investors to think about KBC Group 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.

Check out our latest analysis for KBC Group

Here’s how I find good dividend stocks

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

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

• Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?

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

• 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?

How does KBC Group fare?

The current trailing twelve-month payout ratio for the stock is 55%, which means that the dividend is covered by earnings. Going forward, analysts expect KBC’s payout to increase to 66% of its earnings, which leads to a dividend yield of 6.1%. Moreover, EPS should increase to €5.98. The higher payout forecasted, along with higher earnings, should lead to greater dividend income for investors moving forward.

When assessing the forecast sustainability of a dividend it is also worth considering the cash flow of the business. A company with strong cash flow, relative to earnings, can sometimes sustain a high pay out ratio.

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. Dividend payments from KBC Group have been volatile in the past 10 years, with some years experiencing significant drops of over 25%. 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, KBC Group has a yield of 4.9%, which is high for Banks stocks but still below the market’s top dividend payers.

Next Steps:

If KBC Group is in your portfolio for cash-generating reasons, there may be better alternatives out there. 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. I’ve put together three essential factors you should look at:

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

2. Valuation: What is KBC 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 KBC 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.