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Should Ibstock plc (LON:IBST) Be Part Of Your Dividend Portfolio?

Dividends play a key role in compounding returns over time and can form a large part of our portfolio return. Over the past 2 years, Ibstock plc (LON:IBST) has returned an average of 3.00% per year to shareholders in terms of dividend yield. Should it have a place in your portfolio? Let’s take a look at Ibstock in more detail. View out our latest analysis for Ibstock

5 questions I ask before picking a dividend stock

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

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

  • Has it paid dividend every year without dramatically reducing payout in the past?

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

LSE:IBST Historical Dividend Yield June 21st 18
LSE:IBST Historical Dividend Yield June 21st 18

How does Ibstock fare?

Ibstock has a trailing twelve-month payout ratio of 50.28%, which means that the dividend is covered by earnings. In the near future, analysts are predicting a higher payout ratio of 75.90%, leading to a dividend yield of around 5.48%. Furthermore, EPS should increase to £0.20. The higher payout forecasted, along with higher earnings, should lead to greater dividend income for investors moving forward.

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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. Unfortunately, it is really too early to view Ibstock as a dividend investment. It has only been consistently paying dividends for 2 years, however, standard practice for reliable payers is to look for a 10-year minimum track record.

Compared to its peers, Ibstock generates a yield of 3.07%, which is high for Basic Materials stocks but still below the market’s top dividend payers.

Next Steps:

Whilst there are few things you may like about Ibstock from a dividend stock perspective, the truth is that overall it probably is not the best choice for a dividend investor. But if you are not exclusively a dividend investor, the stock could still be an interesting investment opportunity. 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. I’ve put together three essential factors you should further examine:

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

  2. Valuation: What is IBST 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 IBST 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.