There is a lot to be liked about Northern Bear PLC (LON:NTBR) as an income stock. It has paid dividends over the past 10 years. The stock currently pays out a dividend yield of 6.3%, and has a market cap of UK£12m. Should it have a place in your portfolio? Let's take a look at Northern Bear in more detail.
5 checks you should do on a dividend stock
When researching a dividend stock, I always follow the following screening criteria:
- Is it paying an annual yield above 75% of dividend payers?
- Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?
- Has it increased its dividend per share amount over the past?
- 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 does Northern Bear fare?
The current trailing twelve-month payout ratio for the stock is 25%, which means that the dividend is 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 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. In the case of NTBR it has increased its DPS from £0.030 to £0.040 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. This is an impressive feat, which makes NTBR a true dividend rockstar.
Relative to peers, Northern Bear has a yield of 6.3%, which is on the low-side for Consumer Durables stocks.
Keeping in mind the dividend characteristics above, Northern Bear is definitely worth considering for investors looking to build a dedicated income portfolio. 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 relevant factors you should further research:
- Future Outlook: What are well-informed industry analysts predicting for NTBR’s future growth? Take a look at our free research report of analyst consensus for NTBR’s outlook.
- Valuation: What is NTBR 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 NTBR 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.
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If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.