What To Know Before Buying The Heavitree Brewery PLC (LON:HVTA) For Its Dividend
A large part of investment returns can be generated by dividend-paying stock given their role in compounding returns over time. Historically, The Heavitree Brewery PLC (LON:HVTA) has paid dividends to shareholders, and these days it yields 3.3%. Let’s dig deeper into whether Heavitree Brewery should have a place in your portfolio.
Check out our latest analysis for Heavitree Brewery
5 checks you should do on a dividend stock
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 it paid dividend every year without dramatically reducing payout in the past?
Has dividend per share amount increased over the past?
Can it afford to pay the current rate of dividends from its earnings?
Will it have the ability to keep paying its dividends going forward?
How does Heavitree Brewery fare?
The company currently pays out 18% of its earnings as a dividend, according to its trailing twelve-month data, meaning the dividend is sufficiently covered by earnings. Furthermore, analysts have not forecasted a dividends per share for the future, which makes it hard to determine the yield shareholders should expect, and whether the current payout is sustainable, moving forward.
When considering the sustainability of dividends, it is also worth checking the cash flow of a company. A business with strong cash flow can sustain a higher divided payout ratio than a company with weak cash flow.
If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. HVTA has increased its DPS from £0.070 to £0.077 in the past 10 years. It has also been paying out dividend consistently during this time, as you’d expect for a company increasing its dividend levels. These are all positive signs of a great, reliable dividend stock.
Relative to peers, Heavitree Brewery generates a yield of 3.3%, which is high for Hospitality stocks but still below the market’s top dividend payers.
Next Steps:
Keeping in mind the dividend characteristics above, Heavitree Brewery is definitely worth considering for investors looking to build a dedicated income portfolio. 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 pertinent factors you should further research:
Future Outlook: What are well-informed industry analysts predicting for HVTA’s future growth? Take a look at our free research report of analyst consensus for HVTA’s outlook.
Valuation: What is HVTA 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 HVTA 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.
