Does The Weir Group PLC (LON:WEIR) Have A Place In Your Portfolio?

There is a lot to be liked about The Weir Group PLC (LON:WEIR) as an income stock, over the past 10 years it has returned an average of 2.00% per year. The company currently pays out a dividend yield of 2.18% to shareholders, making it a relatively attractive dividend stock. Should it have a place in your portfolio? Let’s take a look at Weir Group in more detail. Check out our latest analysis for Weir Group

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 their annual yield among the top 25% of dividend payers?

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

• Has it increased its dividend per share amount over the past?

• Does earnings amply cover its dividend payments?

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

LSE:WEIR Historical Dividend Yield June 21st 18

How does Weir Group fare?

The company currently pays out 59.84% 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 WEIR’s payout to fall to 34.11% of its earnings, which leads to a dividend yield of 2.39%. However, EPS should increase to £0.98, 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. WEIR has increased its DPS from £0.17 to £0.44 in the past 10 years. During this period it has not missed a payment, as one would expect for a company increasing its dividend. These are all positive signs of a great, reliable dividend stock.

In terms of its peers, Weir Group produces a yield of 2.18%, which is high for Machinery stocks but still below the market’s top dividend payers.

Next Steps:

Keeping in mind the dividend characteristics above, Weir Group is definitely worth considering for investors 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. I’ve put together three pertinent factors you should further research:

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

2. Valuation: What is WEIR 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 WEIR 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.