Yahoo Finance Should Kingfisher plc (LON:KGF) Be Part Of Your Portfolio?
A sizeable part of portfolio returns can be produced by dividend stocks due to their contribution to compounding returns in the long run. Kingfisher plc (LSE:KGF) has returned to shareholders over the past 10 years, an average dividend yield of 3.00% annually. Does Kingfisher tick all the boxes of a great dividend stock? Below, I’ll take you through my analysis. See our latest analysis for Kingfisher
How I analyze a dividend stock
When researching a dividend stock, I always follow the following screening criteria:
Is it the top 25% annual dividend yield payer?
Has it consistently paid a stable dividend without missing a payment or drastically cutting payout?
Has dividend per share amount increased over the past?
Can it afford 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?
How well does Kingfisher fit our criteria?
Kingfisher has a trailing twelve-month payout ratio of 48.90%, meaning the dividend is sufficiently covered by earnings. However, going forward, analysts expect KGF’s payout to fall to 42.71% of its earnings, which leads to a dividend yield of around 4.24%. Furthermore, EPS is also forecasted to fall to £0.21 in the upcoming year. The lower EPS on top of a lower payout ratio will lead to a fall in dividend payment moving forward. If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. Although KGF’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. Relative to peers, Kingfisher has a yield of 3.52%, which is high for Specialty Retail stocks but still below the market’s top dividend payers.
Next Steps:
Considering the dividend attributes we analyzed above, Kingfisher is definitely worth keeping an eye on for someone looking to build a dedicated income 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. I’ve put together three key factors you should further examine:
Future Outlook: What are well-informed industry analysts predicting for KGF’s future growth? Take a look at our free research report of analyst consensus for KGF’s outlook.
Valuation: What is KGF 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 KGF 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 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.
