Does Vossloh AG (FRA:VOS) Have A Place In Your Portfolio?

A large part of investment returns can be generated by dividend-paying stock given their role in compounding returns over time. Vossloh AG (FRA:VOS) has returned to shareholders over the past 10 years, an average dividend yield of 2.00% annually. Let’s dig deeper into whether Vossloh should have a place in your portfolio. See our latest analysis for Vossloh

Here’s how I find good dividend stocks

If you are a dividend investor, you should always assess these five key metrics:

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

• Has it consistently paid a stable dividend without missing a payment or drastically cutting payout?

• Has the amount of dividend per share grown over the past?

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

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

DB:VOS Historical Dividend Yield June 22nd 18

Does Vossloh pass our checks?

Vossloh has a trailing twelve-month payout ratio of 75.13%, meaning the dividend is sufficiently covered by earnings. However, going forward, analysts expect VOS’s payout to fall to 46.44% of its earnings, which leads to a dividend yield of around 2.47%. However, EPS should increase to €2.1, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment.

If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. Not only have dividend payouts from Vossloh fallen over the past 10 years, it has also been highly volatile during this time, with drops of over 25% in some years. This means that dividend hunters should probably steer clear of the stock, at least for now until the track record improves.

Relative to peers, Vossloh produces a yield of 2.30%, which is high for Machinery stocks but still below the market’s top dividend payers.

Next Steps:

Whilst there are few things you may like about Vossloh from a dividend stock perspective, the truth is that overall it probably is not the best choice for a dividend investor. 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, 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 important aspects you should further examine:

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

2. Valuation: What is VOS 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 VOS 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.