Yahoo Finance Read This Before Considering The SimplyBiz Group plc (LON:SBIZ) For Its Upcoming UK£0.021 Dividend
If you are interested in cashing in on The SimplyBiz Group plc’s (LON:SBIZ) upcoming dividend of UK£0.021 per share, you only have 2 days left to buy the shares before its ex-dividend date, 14 March 2019, in time for dividends payable on the 02 May 2019. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I take a deeper dive into SimplyBiz Group’s latest financial data to analyse its dividend attributes.
View our latest analysis for SimplyBiz Group
5 checks you should do on 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?
Has it consistently paid a stable dividend without missing a payment or drastically cutting payout?
Has the amount of dividend per share grown over the past?
Is its earnings sufficient to payout dividend at the current rate?
Will the company be able to keep paying dividend based on the future earnings growth?
How does SimplyBiz Group fare?
SimplyBiz Group has a trailing twelve-month payout ratio of 77%, which means that the dividend is covered by earnings. In the near future, analysts are predicting lower payout ratio of 32% which, assuming the share price stays the same, leads to a dividend yield of around 2.3%. However, EPS should increase to £0.11, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment.
When thinking about whether a dividend is sustainable, another factor to consider is the cash flow. A business with strong cash flow can sustain a higher divided payout ratio than a company with weak cash flow.
If dividend is a key criteria in your investment consideration, then you need to make sure the dividend stock you’re eyeing out is reliable in its payments. The reality is that it is too early to consider SimplyBiz Group as a dividend investment. It has only been paying out dividend for the past one year. Generally, the rule of thumb for determining whether a stock is a reliable dividend payer is that it should be consistently paying dividends for the past 10 years or more. Clearly there’s a long road ahead before we can ascertain whether SBIZ one as a stable dividend player.
Relative to peers, SimplyBiz Group produces a yield of 2.1%, which is on the low-side for Professional Services stocks.
Next Steps:
Taking all the above into account, SimplyBiz Group is a complicated pick for dividend investors given that there are a couple of positive things about it as well as negative. But if you are not exclusively a dividend investor, the stock could still be an interesting investment opportunity. 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. Below, I’ve compiled three essential factors you should further examine:
Future Outlook: What are well-informed industry analysts predicting for SBIZ’s future growth? Take a look at our free research report of analyst consensus for SBIZ’s outlook.
Valuation: What is SBIZ 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 SBIZ is currently mispriced by the market.
Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
