Synthomer plc (LON:SYNT) Will Pay UK£0.04 In Dividends

Attention dividend hunters! Synthomer plc (LON:SYNT) will be distributing its dividend of UK£0.04 per share on the 06 November 2018, and will start trading ex-dividend in 4 days time on the 04 October 2018. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I take a deeper dive into Synthomer’s latest financial data to analyse its dividend attributes.

See our latest analysis for Synthomer

5 checks you should do on a dividend stock

When researching a dividend stock, I always follow the following screening criteria:

• Is it the top 25% annual dividend yield payer?

• Has it paid dividend every year without dramatically reducing payout in the past?

• Has dividend per share risen in the past couple of years?

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

• Based on future earnings growth, will it be able to continue to payout dividend at the current rate?

LSE:SYNT Historical Dividend Yield September 29th 18

How does Synthomer fare?

Synthomer has a trailing twelve-month payout ratio of 41.8%, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting a payout ratio of 39.4%, leading to a dividend yield of 2.6%. Moreover, EPS should increase to £0.31.

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.

If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. Although SYNT’s per share payments have increased in the past 10 years, it has not been a completely smooth ride. Shareholders would have seen a few years of reduced payments in this time.

In terms of its peers, Synthomer generates a yield of 2.3%, which is high for Chemicals stocks but still below the market’s top dividend payers.

Next Steps:

Keeping in mind the dividend characteristics above, Synthomer is definitely worth considering for investors 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. I’ve put together three essential aspects you should further examine:

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

2. Valuation: What is SYNT 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 SYNT 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.