HP Inc (NYSE:HPQ): What You Have To Know Before Buying For The Upcoming Dividend

Important news for shareholders and potential investors in HP Inc (NYSE:HPQ): The dividend payment of US$0.14 per share will be distributed into shareholder on 03 October 2018, and the stock will begin trading ex-dividend at an earlier date, 11 September 2018. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I take a deeper dive into HP’s latest financial data to analyse its dividend attributes.

See our latest analysis for HP

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 its annual yield among the top 25% of dividend-paying companies?

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

• Has the amount of dividend per share grown over the past?

• 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?

NYSE:HPQ Historical Dividend Yield September 6th 18

How well does HP fit our criteria?

The company currently pays out 19.9% of its earnings as a dividend, according to its trailing twelve-month data, meaning the dividend is sufficiently covered by earnings. Going forward, analysts expect HPQ’s payout to increase to 27.2% of its earnings, which leads to a dividend yield of around 2.4%. However, EPS is forecasted to fall to $2.26 in the upcoming year. Therefore, although payout is expected to increase, the fall in earnings may not equate to higher dividend income.

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. Whilst its per-share payments have increased during the past 10 years, there has been some hiccups. Investors have seen reductions in the dividend per share in the past, although, it has picked up again.

Relative to peers, HP produces a yield of 2.2%, which is high for Tech stocks but still below the market’s top dividend payers.

Next Steps:

Considering the dividend attributes we analyzed above, HP is definitely worth keeping an eye on for someone 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. Below, I’ve compiled three relevant aspects you should further examine:

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

2. Valuation: What is HPQ 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 HPQ 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.