Yahoo Finance Is ZEAL Network SE (ETR:TIM) A Smart Pick For Income Investors?
There is a lot to be liked about ZEAL Network SE (ETR:TIM) as an income stock. It has paid dividends over the past 10 years. The company currently pays out a dividend yield of 4.2% to shareholders, making it a relatively attractive dividend stock. Does ZEAL Network tick all the boxes of a great dividend stock? Below, I’ll take you through my analysis.
See our latest analysis for ZEAL Network
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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 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 it be able to continue to payout at the current rate in the future?
How does ZEAL Network fare?
The current trailing twelve-month payout ratio for the stock is 29%, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting a higher payout ratio of 64% which, assuming the share price stays the same, leads to a dividend yield of around 5.1%. Moreover, EPS should increase to €3.5. The higher payout forecasted, along with higher earnings, should lead to greater dividend income for investors moving forward.
When considering the sustainability of dividends, it is also worth checking the cash flow of a company. Companies with strong cash flow can sustain a higher payout ratio, while companies with weaker cash flow generally cannot.
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 TIM it has increased its DPS from €0.50 to €1 in the past 10 years. During this period it has not missed a payment, as one would expect for a company increasing its dividend. These are all positive signs of a great, reliable dividend stock.
Compared to its peers, ZEAL Network has a yield of 4.2%, which is on the low-side for Hospitality stocks.
Next Steps:
Keeping in mind the dividend characteristics above, ZEAL Network 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. Below, I’ve compiled three essential factors you should further examine:
Future Outlook: What are well-informed industry analysts predicting for TIM’s future growth? Take a look at our free research report of analyst consensus for TIM’s outlook.
Valuation: What is TIM 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 TIM 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 editorial-team@simplywallst.com.
