How Does Euromoney Institutional Investor PLC (LON:ERM) Fare As A Dividend Stock?

A large part of investment returns can be generated by dividend-paying stock given their role in compounding returns over time. In the past 10 years Euromoney Institutional Investor PLC (LON:ERM) has returned an average of 3.00% per year to investors in the form of dividend payouts. Let’s dig deeper into whether Euromoney Institutional Investor should have a place in your portfolio. View out our latest analysis for Euromoney Institutional Investor

5 questions I ask before picking a dividend stock

When assessing a stock as a potential addition to my dividend Portfolio, I look at these five areas:

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

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

LSE:ERM Historical Dividend Yield June 22nd 18

How well does Euromoney Institutional Investor fit our criteria?

The current trailing twelve-month payout ratio for the stock is 25.39%, which means that the dividend is covered by earnings. Going forward, analysts expect ERM’s payout to increase to 42.48% of its earnings, which leads to a dividend yield of 2.30%. However, EPS is forecasted to fall to £0.57 in the upcoming year. Therefore, although payout is expected to increase, the fall in earnings may not equate to higher dividend income.

If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. Although ERM’s per share payments have increased in the past 10 years, it has not been a completely smooth ride. Investors have seen reductions in the dividend per share in the past, although, it has picked up again.

Compared to its peers, Euromoney Institutional Investor produces a yield of 2.20%, which is on the low-side for Media stocks.

Next Steps:

Considering the dividend attributes we analyzed above, Euromoney Institutional Investor is definitely worth keeping an eye on for someone looking to build a dedicated income portfolio. Given that this is purely a dividend analysis, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. There are three key aspects you should look at:

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

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

3. Other 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.