Attention dividend hunters! Industria de Diseño Textil SA (BME:ITX) will be distributing its dividend of €0.30 per share on the 02 November 2018, and will start trading ex-dividend in 4 days time on the 31 October 2018. Is this future income a persuasive enough catalyst for investors to think about Industria de Diseño Textil as an investment today? Below, I’m going to look at the latest data and analyze the stock and its dividend property in further detail.
5 checks you should do on a dividend stock
When assessing a stock as a potential addition to my dividend Portfolio, I look at these five areas:
- Does it pay an annual yield higher than 75% of dividend payers?
- Does it consistently pay out dividends without missing a payment of significantly cutting payout?
- Has it increased its dividend per share amount over the past?
- Is is able to pay the current rate of dividends from its earnings?
- Will it have the ability to keep paying its dividends going forward?
How well does Industria de Diseño Textil fit our criteria?
The company currently pays out 49% of its earnings as a dividend, according to its trailing twelve-month data, which means that the dividend is covered by earnings. Going forward, analysts expect ITX’s payout to increase to 72% of its earnings, which leads to a dividend yield of around 3.6%. Furthermore, EPS should increase to €1.18. The higher payout forecasted, along with higher earnings, should lead to greater dividend income for investors moving forward.
When thinking about whether a dividend is sustainable, another factor to consider is the cash flow. A company with strong cash flow, relative to earnings, can sometimes sustain a high pay out ratio.
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. ITX has increased its DPS from €0.21 to €0.75 in the past 10 years. It has also been paying out dividend consistently during this time, as you’d expect for a company increasing its dividend levels. This is an impressive feat, which makes ITX a true dividend rockstar.
In terms of its peers, Industria de Diseño Textil produces a yield of 3.0%, which is high for Specialty Retail stocks but still below the market’s top dividend payers.
With this in mind, I definitely rank Industria de Diseño Textil as a strong dividend stock, and makes it worth further research for anyone who likes steady income generation from their 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. Below, I’ve compiled three fundamental factors you should further research:
- Future Outlook: What are well-informed industry analysts predicting for ITX’s future growth? Take a look at our free research report of analyst consensus for ITX’s outlook.
- Valuation: What is ITX 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 ITX 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 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 email@example.com.