NCC Group plc (LON:NCC): Dividend Is Coming In 2 Days, Should You Buy?

Have you been keeping an eye on NCC Group plc’s (LON:NCC) upcoming dividend of UK£0.032 per share payable on the 05 October 2018? Then you only have 2 days left before the stock starts trading ex-dividend on the 06 September 2018. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I take a deeper dive into NCC Group’s latest financial data to analyse its dividend attributes.

See our latest analysis for NCC Group

5 questions to ask before buying a dividend stock

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?

• Does it consistently pay out dividends without missing a payment of significantly cutting payout?

• Has dividend per share amount increased over the past?

• Is its earnings sufficient to payout dividend at the current rate?

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

LSE:NCC Historical Dividend Yield September 3rd 18

How does NCC Group fare?

NCC Group has a trailing twelve-month payout ratio of 104%, which means that the dividend is not well-covered by its earnings. However, going forward, analysts expect NCC’s payout to fall into a more sustainable range of 52.5% of its earnings, which leads to a dividend yield of 2.6%. Moreover, EPS should increase to £0.066, 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. In the case of NCC it has increased its DPS from £0.012 to £0.046 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.

Relative to peers, NCC Group has a yield of 2.1%, which is high for IT stocks but still below the market’s top dividend payers.

Next Steps:

Considering the dividend attributes we analyzed above, NCC Group is definitely worth keeping an eye on for someone looking to build a dedicated income portfolio. 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. There are three relevant aspects you should further examine:

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

2. Valuation: What is NCC 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 NCC 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 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.