Yahoo Finance What To Know Before Buying Elegant Hotels Group Plc (LON:EHG) For Its Dividend
Dividends play a key role in compounding returns over time and can form a large part of our portfolio return. Elegant Hotels Group Plc (LON:EHG) has recently paid dividends to shareholders, and currently yields 4.9%. Let’s dig deeper into whether Elegant Hotels Group should have a place in your portfolio.
View our latest analysis for Elegant Hotels Group
5 questions to ask before buying a dividend stock
If you are a dividend investor, you should always assess these five key metrics:
Is it paying an annual yield above 75% 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 have the ability to keep paying its dividends going forward?
How does Elegant Hotels Group fare?
Elegant Hotels Group has a trailing twelve-month payout ratio of 46%, which means that the dividend is covered by earnings. In the near future, analysts are predicting a payout ratio of 44%, leading to a dividend yield of around 5.9%. In addition to this, EPS should increase to $0.11.
When considering the sustainability of dividends, it is also worth checking the cash flow of a company. Cash flow is important because companies with strong cash flow can usually sustain higher payout ratios.
If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. The reality is that it is too early to consider Elegant Hotels Group as a dividend investment. It has only been consistently paying dividends for 3 years, however, standard practice for reliable payers is to look for a 10-year minimum track record.
Compared to its peers, Elegant Hotels Group produces a yield of 4.9%, which is high for Hospitality stocks but still below the market’s top dividend payers.
Next Steps:
Whilst there are few things you may like about Elegant Hotels Group 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 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 fundamental aspects you should look at:
Valuation: What is EHG 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 EHG is currently mispriced by the market.
Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Elegant Hotels Group’s board and the CEO’s back ground.
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.
