Read This Before Buying Clipper Logistics plc (LON:CLG) For Its Upcoming UK£0.056 Dividend

Attention dividend hunters! Clipper Logistics plc (LON:CLG) will be distributing its dividend of UK£0.056 per share on the 01 October 2018, and will start trading ex-dividend in 2 days time on the 06 September 2018. Is this future income stream a compelling catalyst for dividend investors to think about the stock as an investment today? Let’s take a look at Clipper Logistics’s most recent financial data to examine its dividend characteristics in more detail.

Check out our latest analysis for Clipper Logistics

5 questions to ask before buying a dividend stock

When assessing a stock as a potential addition to my dividend Portfolio, I look at these five areas:

• Is it paying an annual yield above 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 its earnings sufficient to payout dividend at the current rate?

• Will it have the ability to keep paying its dividends going forward?

LSE:CLG Historical Dividend Yield September 3rd 18

Does Clipper Logistics pass our checks?

The current trailing twelve-month payout ratio for the stock is 59.0%, meaning the dividend is sufficiently covered by earnings. Going forward, analysts expect CLG’s payout to remain around the same level at 56.2% of its earnings, which leads to a dividend yield of 3.4%. In addition to this, EPS should increase to £0.16.

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 Clipper Logistics as a dividend investment. It has only been consistently paying dividends for 4 years, however, standard practice for reliable payers is to look for a 10-year minimum track record.

Compared to its peers, Clipper Logistics generates a yield of 2.6%, which is on the low-side for Commercial Services stocks.

Next Steps:

Taking all the above into account, Clipper Logistics is a complicated pick for dividend investors given that there are a couple of positive things about it as well as negative. 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. There are three essential aspects you should further examine:

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

2. Valuation: What is CLG 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 CLG 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 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.