Yahoo Finance How Does Swisscom AG (VTX:SCMN) Fare As A Dividend Stock?
Over the past 10 years Swisscom AG (VTX:SCMN) has been paying dividends to shareholders. The company currently pays out a dividend yield of 4.6% to shareholders, making it a relatively attractive dividend stock. Let’s dig deeper into whether Swisscom should have a place in your portfolio.
View our latest analysis for Swisscom
5 checks you should do on 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 the amount of dividend per share grown 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?
How does Swisscom fare?
The current trailing twelve-month payout ratio for the stock is 75%, meaning the dividend is sufficiently covered by earnings. Going forward, analysts expect SCMN’s payout to remain around the same level at 77% of its earnings, which leads to a dividend yield of around 4.6%. Furthermore, EPS is forecasted to fall to CHF28.6 in the upcoming year.
When considering the sustainability of dividends, it is also worth checking the cash flow of a company. A business with strong cash flow can sustain a higher divided payout ratio than a company with weak cash flow.
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. In the case of SCMN it has increased its DPS from CHF18 to CHF22 in the past 10 years. It has also been paying out dividend consistently during this time, as you’d expect for a company increasing its dividend levels. These are all positive signs of a great, reliable dividend stock.
Compared to its peers, Swisscom generates a yield of 4.6%, which is on the low-side for Telecom stocks.
Next Steps:
With this in mind, I definitely rank Swisscom as a strong dividend stock, and makes it worth further research for anyone who likes steady income generation from their portfolio. 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. There are three important aspects you should further examine:
Future Outlook: What are well-informed industry analysts predicting for SCMN’s future growth? Take a look at our free research report of analyst consensus for SCMN’s outlook.
Valuation: What is SCMN 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 SCMN is currently mispriced by the market.
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 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.
