Snap-on Incorporated (NYSE:SNA): What You Have To Know Before Buying For The Upcoming Dividend
Important news for shareholders and potential investors in Snap-on Incorporated (NYSE:SNA): The dividend payment of $0.82 per share will be distributed into shareholder on 16 March 2018, and the stock will begin trading ex-dividend at an earlier date, 01 March 2018. Should you diversify into Snap-on 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 Snap-on
How I analyze a dividend stock
When assessing a stock as a potential addition to my dividend Portfolio, I look at these five areas:
Does it pay an annual yield higher than 75% 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 its earnings sufficient to payout dividend at the current rate?
Based on future earnings growth, will it be able to continue to payout dividend at the current rate?
Does Snap-on pass our checks?
Snap-on has a trailing twelve-month payout ratio of 30.36%, which means that the dividend is covered by earnings. Going forward, analysts expect SNA’s payout to remain around the same level at 29.10% of its earnings, which leads to a dividend yield of around 2.27%. Furthermore, EPS should increase to $11.69. 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. SNA has increased its DPS from $1.2 to $3.28 in the past 10 years. During this period it has not missed a payment, as one would expect for a company increasing its dividend. This is an impressive feat, which makes SNA a true dividend rockstar. In terms of its peers, Snap-on has a yield of 2.05%, which is high for Machinery stocks but still below the low risk savings rate.
Next Steps:
Keeping in mind the dividend characteristics above, Snap-on is definitely worth considering for investors looking to build a dedicated income portfolio. 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. Below, I’ve compiled three key aspects you should look at:
1. Future Outlook: What are well-informed industry analysts predicting for SNA’s future growth? Take a look at our free research report of analyst consensus for SNA’s outlook.
2. Valuation: What is SNA 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 SNA is currently mispriced by the market.
3. 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 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.