Important news for shareholders and potential investors in Eurocell plc (LON:ECEL): The dividend payment of UK£0.062 per share will be distributed to shareholders on 22 May 2019, and the stock will begin trading ex-dividend at an earlier date, 25 April 2019. Should you diversify into Eurocell and boost your portfolio income stream? Well, keep on reading because today, I'm going to look at the latest data and analyze the stock and its dividend property in further detail.

Check out our latest analysis for Eurocell

How I analyze a dividend stock

If you are a dividend investor, you should always assess these five key metrics:

• 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 it increased its dividend per share amount over the past?

• Does earnings amply cover its dividend payments?

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

How well does Eurocell fit our criteria?

The current trailing twelve-month payout ratio for the stock is 48%, which means that the dividend is covered by earnings. Going forward, analysts expect ECEL's payout to remain around the same level at 47% of its earnings. Assuming a constant share price, this equates to a dividend yield of 4.6%. In addition to this, EPS is forecasted to fall to £0.19 in the upcoming year.

If you want to dive deeper into the sustainability of a certain payout ratio, you may wish to consider 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.

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 Eurocell 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, Eurocell generates a yield of 4.0%, which is high for Building stocks but still below the market's top dividend payers.

Next Steps:

If Eurocell is in your portfolio for cash-generating reasons, there may be better alternatives out there. However, if you are not strictly just a dividend investor, the stock could still offer some interesting investment opportunities. Given that this is purely a dividend analysis, I recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. There are three important factors you should look at:

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

2. Valuation: What is ECEL 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 ECEL is currently mispriced by the market.

3. Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.