Yahoo Finance Is Sabre Corporation (NASDAQ:SABR) An Attractive Dividend Stock?
A large part of investment returns can be generated by dividend-paying stock given their role in compounding returns over time. Sabre Corporation (NASDAQ:SABR) has paid a dividend to shareholders in the last few years. It currently yields 2.3%. Should it have a place in your portfolio? Let’s take a look at Sabre in more detail.
See our latest analysis for Sabre
5 checks you should do on 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 it consistently paid a stable dividend without missing a payment or drastically cutting payout?
Has dividend per share amount increased over the past?
Can it afford to pay the current rate of dividends from its earnings?
Will it be able to continue to payout at the current rate in the future?
Does Sabre pass our checks?
Sabre has a trailing twelve-month payout ratio of 44%, meaning the dividend is sufficiently covered by earnings. However, going forward, analysts expect SABR’s payout to fall to 36% of its earnings, which leads to a dividend yield of 2.4%. Moreover, EPS is also forecasted to fall to $1.16 in the upcoming year. The lower EPS on top of a lower payout ratio will lead to a fall in dividend payment moving forward.
When thinking about whether a dividend is sustainable, another factor to consider is the cash flow. A company with strong cash flow, relative to earnings, can sometimes sustain a high pay out ratio.
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. Unfortunately, it is really too early to view Sabre as a dividend investment. It has only been consistently paying dividends for 4 years, however, standard practice for reliable payers is to look for a 10-year minimum track record.
Compared to its peers, Sabre produces a yield of 2.3%, which is high for IT stocks but still below the market’s top dividend payers.
Next Steps:
If Sabre is in your portfolio for cash-generating reasons, there may be better alternatives out there. 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, 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 factors you should further examine:
Future Outlook: What are well-informed industry analysts predicting for SABR’s future growth? Take a look at our free research report of analyst consensus for SABR’s outlook.
Valuation: What is SABR 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 SABR 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.
