Is Autins Group plc (LON:AUTG) A Smart Choice For Dividend Investors?

A sizeable part of portfolio returns can be produced by dividend stocks due to their contribution to compounding returns in the long run. Over the past 2 years, Autins Group plc (LON:AUTG) has returned an average of 2.00% per year to shareholders in terms of dividend yield. Let’s dig deeper into whether Autins Group should have a place in your portfolio.

View our latest analysis for Autins Group

5 checks you should do on a dividend stock

Whenever I am looking at a potential dividend stock investment, I always check these five metrics:

• Is their annual yield among the top 25% 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?

• Is its earnings sufficient to payout dividend at the current rate?

• Will it be able to continue to payout at the current rate in the future?

AIM:AUTG Historical Dividend Yield August 14th 18

Does Autins Group pass our checks?

The company currently pays out 43.41% of its earnings as a dividend, according to its trailing twelve-month data, which means that the dividend is covered by earnings. However, going forward, analysts expect AUTG’s payout to fall to 18.68% of its earnings, which leads to a dividend yield of around 3.12%. Moreover, EPS is also forecasted to fall to £0.016 in the upcoming year. The lower EPS on top of a lower payout ratio will lead to a fall in dividend payment moving forward.

If dividend is a key criteria in your investment consideration, then you need to make sure the dividend stock you’re eyeing out is reliable in its payments. The reality is that it is too early to consider Autins Group as a dividend investment. It has only been consistently paying dividends for 2 years, however, standard practice for reliable payers is to look for a 10-year minimum track record.

Compared to its peers, Autins Group produces a yield of 4.16%, which is high for Auto Components stocks but still below the market’s top dividend payers.

Next Steps:

If Autins Group 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, 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 examine:

1. Future Outlook: What are well-informed industry analysts predicting for AUTG’s future growth? Take a look at our free research report of analyst consensus for AUTG’s outlook.

2. Historical Performance: What has AUTG’s returns been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.

3. 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.