Is Buying Scottish Pacific Group Limited (ASX:SCO) For Its Upcoming AU$0.10 Dividend A Good Choice?
If you are interested in cashing in on Scottish Pacific Group Limited’s (ASX:SCO) upcoming dividend of AU$0.10 per share, you only have 2 days left to buy the shares before its ex-dividend date, 04 September 2018, in time for dividends payable on the 19 September 2018. Should you diversify into Scottish Pacific 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.
Check out our latest analysis for Scottish Pacific Group
5 checks you should use to assess a dividend stock
When assessing a stock as a potential addition to my dividend Portfolio, I look at these five areas:
Is it paying an annual yield above 75% of dividend payers?
Has it paid dividend every year without dramatically reducing payout in the past?
Has it increased its dividend per share amount 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 Scottish Pacific Group fare?
The company currently pays out 79.3% of its earnings as a dividend, according to its trailing twelve-month data, which means that the dividend is covered by earnings. Going forward, analysts expect SCO’s payout to remain around the same level at 77.4% of its earnings, which leads to a dividend yield of around 6.2%. In addition to this, EPS should increase to A$0.26.
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. The reality is that it is too early to consider Scottish Pacific Group as a dividend investment. It has only been consistently paying dividends for 2 years, however, standard practice for reliable payers is to look for a 10-year minimum track record.
Compared to its peers, Scottish Pacific Group produces a yield of 5.5%, which is high for Consumer Finance stocks but still below the market’s top dividend payers.
Next Steps:
Taking all the above into account, Scottish Pacific Group is a complicated pick for dividend investors given that there are a couple of positive things about it as well as negative. 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, 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 examine:
Future Outlook: What are well-informed industry analysts predicting for SCO’s future growth? Take a look at our free research report of analyst consensus for SCO’s outlook.
Valuation: What is SCO 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 SCO 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.
