How Does Prysmian S.p.A. (BIT:PRY) Fare As A Dividend Stock?
A sizeable part of portfolio returns can be produced by dividend stocks due to their contribution to compounding returns in the long run. Historically, Prysmian S.p.A. (BIT:PRY) has paid dividends to shareholders, and these days it yields 2.6%. Should it have a place in your portfolio? Let’s take a look at Prysmian in more detail.
See our latest analysis for Prysmian
How I analyze a dividend stock
When assessing a stock as a potential addition to my dividend Portfolio, I look at these five areas:
Is their annual yield among the top 25% of dividend payers?
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 is able 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?
How does Prysmian fare?
The current trailing twelve-month payout ratio for the stock is 47%, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting lower payout ratio of 28% which, assuming the share price stays the same, leads to a dividend yield of 3.1%. However, EPS should increase to €1.53, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment.
When assessing the forecast sustainability of a dividend it is also worth considering the cash flow of the business. Companies with strong cash flow can sustain a higher payout ratio, while companies with weaker cash flow generally cannot.
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. 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.
In terms of its peers, Prysmian produces a yield of 2.6%, which is on the low-side for Electrical stocks.
Next Steps:
Keeping in mind the dividend characteristics above, Prysmian is definitely worth considering for investors 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. I’ve put together three pertinent aspects you should further examine:
Future Outlook: What are well-informed industry analysts predicting for PRY’s future growth? Take a look at our free research report of analyst consensus for PRY’s outlook.
Valuation: What is PRY 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 PRY 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.
