Consider This Before Buying Atlanta Limited (NSE:ATLANTA) For The 1.2% Dividend

Dividends play a key role in compounding returns over time and can form a large part of our portfolio return. Historically, Atlanta Limited (NSE:ATLANTA) has paid a dividend to shareholders. It currently yields 1.2%. Does Atlanta tick all the boxes of a great dividend stock? Below, I’ll take you through my analysis.

Check out our latest analysis for Atlanta

Here’s how I find good dividend stocks

When researching a dividend stock, I always follow the following screening criteria:

• 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 risen in the past couple of years?

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

• Will it have the ability to keep paying its dividends going forward?

NSEI:ATLANTA Historical Dividend Yield October 23rd 18

How does Atlanta fare?

The current payout ratio for ATLANTA is negative, which means that it is loss-making, and paying its dividend from its retained earnings.

When thinking about whether a dividend is sustainable, another factor to consider is the cash flow. 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. Although ATLANTA’s per share payments have increased in the past 10 years, it has not been a completely smooth ride. Shareholders would have seen a few years of reduced payments in this time.

Compared to its peers, Atlanta produces a yield of 1.2%, which is on the low-side for Construction stocks.

Next Steps:

Now you know to keep in mind the reason why investors should be careful investing in Atlanta for the dividend. On the other hand, if you are not strictly just a dividend investor, the stock could still be offering 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. Below, I’ve compiled three pertinent aspects you should look at:

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

2. Historical Performance: What has ATLANTA’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.