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What To Know Before Buying Melco Resorts & Entertainment Limited (NASDAQ:MLCO) For Its Dividend

A large part of investment returns can be generated by dividend-paying stock given their role in compounding returns over time.
Historically, Melco Resorts Entertainment Limited (NASDAQ:MLCO) has paid dividends to shareholders, and these days it yields 2.9%.
Let’s dig deeper into whether Melco Resorts Entertainment should have a place in your portfolio.

See our latest analysis for Melco Resorts Entertainment

Here’s how I find good dividend stocks

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

  • Does it pay an annual yield higher than 75% of dividend payers?
  • Has it consistently paid a stable dividend without missing a payment or drastically cutting payout?
  • Has dividend per share risen in the past couple of years?
  • Is its earnings sufficient to payout dividend at the current rate?
  • Will it have the ability to keep paying its dividends going forward?

NasdaqGS:MLCO Historical Dividend Yield, March 24th 2019
NasdaqGS:MLCO Historical Dividend Yield, March 24th 2019

Does Melco Resorts Entertainment pass our checks?

The company currently pays out 80% of its earnings as a dividend, according to its trailing twelve-month data,
which means that the dividend is covered by earnings.
However, going forward, analysts expect MLCO’s payout to fall to 48% of its earnings. Assuming a constant share price, this equates to a
dividend yield of 3.2%.
However, EPS should increase to $0.95, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment.

When considering the sustainability of dividends, it is also worth checking the cash flow of a company.
A business with strong cash flow can sustain a higher divided payout ratio than a company with weak cash flow.

Reliablity is an important factor for dividend stocks,

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