Why Ultra Electronics Holdings plc (LON:ULE) Is A Top Dividend Stocks

Over the past 10 years Ultra Electronics Holdings plc (LSE:ULE) has returned an average of 2.00% per year from dividend payouts. The stock currently pays out a dividend yield of 3.03%, and has a market cap of UK£1.22B. Should it have a place in your portfolio? Let’s take a look at Ultra Electronics Holdings in more detail. View our latest analysis for Ultra Electronics Holdings

5 questions I ask before picking a dividend stock

Whenever I am looking at a potential dividend stock investment, I always check these five metrics:

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

• Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?

• Has dividend per share amount increased over the past?

• Does earnings amply cover its dividend payments?

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

LSE:ULE Historical Dividend Yield Jun 5th 18

Does Ultra Electronics Holdings pass our checks?

Ultra Electronics Holdings has a trailing twelve-month payout ratio of 74.93%, which means that the dividend is covered by earnings. In the near future, analysts are predicting lower payout ratio of 41.71%, leading to a dividend yield of around 3.20%. However, EPS should increase to £0.71, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment. 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. In the case of ULE it has increased its DPS from £0.21 to £0.5 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. These are all positive signs of a great, reliable dividend stock. Compared to its peers, Ultra Electronics Holdings produces a yield of 3.03%, which is high for Aerospace & Defense stocks but still below the market’s top dividend payers.

Next Steps:

Keeping in mind the dividend characteristics above, Ultra Electronics Holdings is definitely worth considering for investors looking to build a dedicated income portfolio. 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. I’ve put together three relevant aspects you should look at:

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

2. Valuation: What is ULE 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 ULE 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 pass 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.