On the 18 December 2017, Volution Group plc (LSE:FAN) will be paying shareholders an upcoming dividend amount of £0.03 per share. However, investors must have bought the company’s stock before 23 November 2017 in order to qualify for the payment. That means you have only 3 days left! What does this mean for current shareholders and potential investors? Below, I will explain how holding FAN can impact your portfolio income stream, by analysing the stock’s most recent financial data and dividend attributes. View our latest analysis for Volution Group
5 checks you should do on a dividend stock
If you are a dividend investor, you should always assess these five key metrics:
- 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?
- Can it afford 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 Volution Group fare?
The current payout ratio for the stock is 59.53%, meaning the dividend is sufficiently covered by earnings. However, going forward, analysts expect FAN’s payout to fall to 30.06% of its earnings, which leads to a dividend yield of around 2.16%. However, EPS should increase to £0.07, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment. If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. The reality is that it is too early to consider Volution Group 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, FAN has a yield of 1.95%, which is on the low-side for building products stocks.
What this means for you:
Are you a shareholder? Investors may not have the best feeling about their investment in FAN right now, in terms of its dividend attributes. It may be worth exploring other dividend stocks as alternatives to FAN or even look at high-growth stocks to complement your steady income stocks. I suggest continuing your research by taking a look at my interactive free list of dividend rockstars as well as high-growth stocks to potentially add to your holdings.
Are you a potential investor? Now you know to keep in mind the reason why investors should be careful investing in FAN for the dividend. But if you are not exclusively a dividend investor, FAN could still be an interesting investment opportunity. As always, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. Take a look at our latest free fundmental analysis to explore other aspects of FAN.
To help readers see pass 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.