Investors Should Be Cautious Of Dekpol SA’s (WSE:DEK) 2.73% Dividend

Dividends play a key role in compounding returns over time and can form a large part of our portfolio return. Dekpol SA (WSE:DEK) has returned an average dividend yield of 2.00% annually to shareholders. Let’s dig deeper into whether Dekpol should have a place in your portfolio. See our latest analysis for Dekpol

5 checks you should do on a dividend stock

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

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

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

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

• Does earnings amply cover its dividend payments?

• Will it have the ability to keep paying its dividends going forward?

WSE:DEK Historical Dividend Yield June 26th 18

Does Dekpol pass our checks?

Dekpol has a trailing twelve-month payout ratio of 26.27%, which means that the dividend is covered by earnings. Furthermore, analysts have not forecasted a dividends per share for the future, which makes it hard to determine the yield shareholders should expect, and whether the current payout is sustainable, moving forward.

If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. The reality is that it is too early to consider Dekpol 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.

Relative to peers, Dekpol generates a yield of 2.73%, which is on the low-side for Construction stocks.

Next Steps:

Now you know to keep in mind the reason why investors should be careful investing in Dekpol for the dividend. On the other hand, if you are not strictly just a dividend investor, the stock could still be offering some interesting investment opportunities. Given that this is purely a dividend analysis, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. There are three important factors you should further examine:

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

2. Historical Performance: What has DEK’s returns been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.

3. 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.