How Does Energizer Holdings Inc (NYSE:ENR) Fare As A Dividend Stock?
Dividends play a key role in compounding returns over time and can form a large part of our portfolio return. Energizer Holdings Inc (NYSE:ENR) has recently paid dividends to shareholders, and currently yields 1.9%. Should it have a place in your portfolio? Let’s take a look at Energizer Holdings in more detail.
View our latest analysis for Energizer Holdings
5 questions I ask before picking a dividend stock
When researching a dividend stock, I always follow the following screening criteria:
Does it pay an annual yield higher than 75% of dividend payers?
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?
Does earnings amply cover its dividend payments?
Based on future earnings growth, will it be able to continue to payout dividend at the current rate?
How well does Energizer Holdings fit our criteria?
The current trailing twelve-month payout ratio for the stock is 55%, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting lower payout ratio of 34%, leading to a dividend yield of 2.1%. However, EPS should increase to $3.2, 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. A company with strong cash flow, relative to earnings, can sometimes sustain a high pay out ratio.
If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. Unfortunately, it is really too early to view Energizer Holdings as a dividend investment. It has only been consistently paying dividends for 3 years, however, standard practice for reliable payers is to look for a 10-year minimum track record.
In terms of its peers, Energizer Holdings has a yield of 1.9%, which is on the low-side for Household Products stocks.
Next Steps:
If Energizer Holdings 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 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 important aspects you should look at:
Future Outlook: What are well-informed industry analysts predicting for ENR’s future growth? Take a look at our free research report of analyst consensus for ENR’s outlook.
Valuation: What is ENR 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 ENR 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.
