Is Buying Flowtech Fluidpower plc (LON:FLO) For Its Upcoming £0.04 Dividend A Good Choice?

If you are interested in cashing in on Flowtech Fluidpower plc’s (AIM:FLO) upcoming dividend of £0.04 per share, you only have 3 days left to buy the shares before its ex-dividend date, 07 June 2018, in time for dividends payable on the 13 July 2018. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I take a deeper dive into Flowtech Fluidpower’s latest financial data to analyse its dividend attributes. Check out our latest analysis for Flowtech Fluidpower

Here’s how I find good dividend stocks

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

• Is its annual yield among the top 25% of dividend-paying companies?

• Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?

• Has dividend per share risen in the past couple of years?

• Is it able to pay the current rate of dividends from its earnings?

• Will the company be able to keep paying dividend based on the future earnings growth?

AIM:FLO Historical Dividend Yield Jun 3rd 18

How well does Flowtech Fluidpower fit our criteria?

The company currently pays out 59.61% 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 FLO’s payout to fall to 35.64% of its earnings, which leads to a dividend yield of around 4.03%. However, EPS should increase to £0.13, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment. 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. Unfortunately, it is really too early to view Flowtech Fluidpower as a dividend investment. It has only been consistently paying dividends for 4 years, however, standard practice for reliable payers is to look for a 10-year minimum track record. Relative to peers, Flowtech Fluidpower generates a yield of 3.66%, which is high for Trade Distributors stocks but still below the market’s top dividend payers.

Next Steps:

If Flowtech Fluidpower is in your portfolio for cash-generating reasons, there may be better alternatives out there. But if you are not exclusively a dividend investor, the stock could still be an interesting investment opportunity. 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. Below, I’ve compiled three pertinent aspects you should further examine:

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

2. Valuation: What is FLO 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 FLO is currently mispriced by the market.

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 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.