Dividends can be underrated but they form a large part of investment returns,water temperature at marco island playing an important role in compounding returns in the long run. In the last few years Flow Traders N.V. (

AMS:FLOW

) has paid a dividend to shareholders. Today it yields 6.1%. Does Flow Traders tick all the boxes of a great dividend stock? Below, I’ll take you through my analysis.

See our latest analysis for Flow Traders

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 it consistently paid a stable dividend without missing a payment or drastically cutting payout?

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

Is is able to pay the current rate of dividends from its earnings?

Will the company be able to keep paying dividend based on the future earnings growth?

ENXTAM:FLOW Historical Dividend Yield January 2nd 19

How does Flow Traders fare?

The company currently pays out 55% of its earnings as a dividend, according to its trailing twelve-month data, which means that the dividend is covered by earnings. In the near future, analysts are predicting a payout ratio of 60% which, assuming the share price stays the same, leads to a dividend yield of around 5.3%. Furthermore, EPS is forecasted to fall to €2.72 in the upcoming year.

When assessing the forecast sustainability of a dividend

it is also worth considering the cash flow of the business

. Cash flow is important because companies with strong cash flow can usually sustain higher payout ratios.

If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. Unfortunately, it is really too early to view Flow Traders as a dividend investment. It has only been consistently paying dividends for 3 years, however, standard practice for reliable payers is to look for a 10-year minimum track record.

Compared to its peers, Flow Traders generates a yield of 6.1%, which is high for Capital Markets stocks but still below the market’s top dividend payers.

Next Steps:

Whilst there are few things you may like about Flow Traders from a dividend stock perspective, the truth is that overall it probably is not the best choice for a dividend investor. 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, 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 important factors you should further examine:

Story continues

Future Outlook

: What are well-informed industry analysts predicting for FLOW’s future growth? Take a look at our

free research report of analyst consensus

for FLOW’s outlook.

Valuation

: What is FLOW 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 FLOW 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

[email protected]

.

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