Yahoo Finance Is Delphi Technologies PLC (NYSE:DLPH) An Attractive Dividend Stock?
Dividends play an important role in compounding returns in the long run and end up forming a sizeable part of investment returns. Delphi Technologies PLC (NYSE:DLPH) has begun paying dividends recently. It now yields 4.3%. Does Delphi Technologies tick all the boxes of a great dividend stock? Below, I’ll take you through my analysis.
See our latest analysis for Delphi Technologies
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5 checks you should do on a dividend stock
When researching a dividend stock, I always follow the following screening criteria:
Is it paying an annual yield above 75% of dividend payers?
Has it paid dividend every year without dramatically reducing payout in the past?
Has dividend per share amount increased over the past?
Does earnings amply cover its dividend payments?
Based on future earnings growth, will it be able to continue to payout dividend at the current rate?
How well does Delphi Technologies fit our criteria?
The current trailing twelve-month payout ratio for the stock is 16%, which means that the dividend is covered by earnings. Going forward, analysts expect DLPH’s payout to remain around the same level at 16% of its earnings. Assuming a constant share price, this equates to a dividend yield of 4.3%. In addition to this, EPS is forecasted to fall to $2.97 in the upcoming year.
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.
Reliablity is an important factor for dividend stocks, particularly for income investors who want a strong track record of payment and a positive outlook for future payout. The reality is that it is too early to consider Delphi Technologies as a dividend investment. Last year was the company’s first dividend payment, so it is certainly early days. The standard practice for reliable payers is to look for 10 or so years of track record.
Compared to its peers, Delphi Technologies generates a yield of 4.3%, which is high for Auto Components stocks.
Next Steps:
Keeping in mind the dividend characteristics above, Delphi Technologies 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. There are three key factors you should further examine:
Future Outlook: What are well-informed industry analysts predicting for DLPH’s future growth? Take a look at our free research report of analyst consensus for DLPH’s outlook.
Valuation: What is DLPH 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 DLPH 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.
