Yahoo Finance Read This Before Considering Delphi Technologies PLC (NYSE:DLPH) For Its Upcoming US$0.17 Dividend
Have you been keeping an eye on Delphi Technologies PLC’s (NYSE:DLPH) upcoming dividend of US$0.17 per share payable on the 14 November 2018? Then you only have 4 days left before the stock starts trading ex-dividend on the 05 November 2018. Is this future income stream a compelling catalyst for dividend investors to think about the stock as an investment today? Let’s take a look at Delphi Technologies’s most recent financial data to examine its dividend characteristics in more detail.
View our latest analysis for Delphi Technologies
5 checks you should use to assess a dividend stock
When assessing a stock as a potential addition to my dividend Portfolio, I look at these five areas:
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 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 well does Delphi Technologies fit our criteria?
The current trailing twelve-month payout ratio for the stock is 9.5%, which means that the dividend is covered by earnings. Going forward, analysts expect DLPH’s payout to increase to 16% of its earnings, which leads to a dividend yield of around 3.2%. Moreover, EPS should increase to $3.63. The higher payout forecasted, along with higher earnings, should lead to greater dividend income for investors moving forward.
When assessing the forecast sustainability of a dividend it is also worth considering the cash flow of the business. 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. Unfortunately, it is really too early to view Delphi Technologies as a dividend investment. It has only been paying out dividend for the past one year. Generally, the rule of thumb for determining whether a stock is a reliable dividend payer is that it should be consistently paying dividends for the past 10 years or more. Clearly there’s a long road ahead before we can ascertain whether DLPH one as a stable dividend player.
Relative to peers, Delphi Technologies produces a yield of 3.0%, which is high for Auto Components stocks but still below the market’s top dividend payers.
Next Steps:
If you are building an income portfolio, then Delphi Technologies is a complicated choice since it has some positive aspects as well as negative ones. But if you are not exclusively a dividend investor, the stock could still be an interesting investment opportunity. 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. I’ve put together three relevant aspects you should further research:
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.
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.
