Why Dividend Hunters Love Wynnstay Group Plc (LON:WYN)
Want to participate in a short research study? Help shape the future of investing tools and you could win a $250 gift card!
There is a lot to be liked about Wynnstay Group Plc (LON:WYN) as an income stock. It has paid dividends over the past 10 years. The company is currently worth UK£81m, and now yields roughly 3.3%. Does Wynnstay Group tick all the boxes of a great dividend stock? Below, I’ll take you through my analysis.
View our latest analysis for Wynnstay Group
How I analyze a dividend stock
When assessing a stock as a potential addition to my dividend Portfolio, I look at these five areas:
Does it pay an annual yield higher than 75% of dividend payers?
Has it paid dividend every year without dramatically reducing payout in the past?
Has dividend per share risen in the past couple of years?
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?
How well does Wynnstay Group fit our criteria?
The company currently pays out 34% of its earnings as a dividend, according to its trailing twelve-month data, which means that the dividend is covered by earnings. In the near future, analysts are predicting a payout ratio of 35% which, assuming the share price stays the same, leads to a dividend yield of around 3.4%. In addition to this, EPS is forecasted to fall to £0.39 in the upcoming year.
When assessing the forecast sustainability of a dividend it is also worth considering the cash flow of the business. A business with strong cash flow can sustain a higher divided payout ratio than a company with weak cash flow.
If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. WYN has increased its DPS from £0.027 to £0.13 in the past 10 years. During this period it has not missed a payment, as one would expect for a company increasing its dividend. This is an impressive feat, which makes WYN a true dividend rockstar.
Relative to peers, Wynnstay Group produces a yield of 3.3%, which is high for Food stocks but still below the market’s top dividend payers.
Next Steps:
With these dividend metrics in mind, I definitely rank Wynnstay Group as a strong income stock, and is worth further research for anyone who considers dividends an important part of their portfolio strategy. 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. There are three important factors you should further research:
Future Outlook: What are well-informed industry analysts predicting for WYN’s future growth? Take a look at our free research report of analyst consensus for WYN’s outlook.
Valuation: What is WYN 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 WYN is currently mispriced by the market.
Other 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.
