Shares of Richards Packaging Income Fund (TSX:RPI.UN) will begin trading ex-dividend in 3 days. To qualify for the dividend check of CA$0.11 per share, investors must have owned the shares prior to 27 February 2018, which is the last day the company’s management will finalize their list of shareholders to which they will send dividend payments. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I take a deeper dive into Richards Packaging Income Fund’s latest financial data to analyse its dividend attributes. See our latest analysis for Richards Packaging Income Fund
5 checks you should use to assess a dividend stock
Whenever I am looking at a potential dividend stock investment, I always check these five metrics:
- Does it pay an annual yield higher than 75% of dividend payers?
- Does it consistently pay out dividends without missing a payment of significantly cutting payout?
- Has it increased its dividend per share amount over the past?
- Does earnings amply cover its dividend payments?
- Based on future earnings growth, will it be able to continue to payout dividend at the current rate?
How does Richards Packaging Income Fund fare?
The current trailing twelve-month payout ratio for RPI.UN is 95.52%, meaning the dividend is not sufficiently covered by its earnings. Furthermore, analysts have not forecasted a dividends per share for the future, which makes it hard to determine the yield shareholders should expect, and whether the current payout is sustainable, moving forward. 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. Although RPI.UN’s per share payments have increased in the past 10 years, it has not been a completely smooth ride. Shareholders would have seen a few years of reduced payments in this time. Relative to peers, Richards Packaging Income Fund produces a yield of 4.13%, which is high for Packaging stocks.
If you are building an income portfolio, then Richards Packaging Income Fund is a complicated choice since it has some positive aspects as well as negative ones. 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 pertinent aspects you should further examine:
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