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Dividend Stock Buy: PDL BioPharma Inc (NASDAQ:PDLI)
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We assess PDL BioPharma Inc (NASDAQ:PDLI), [Trend Analysis] a dividend paying company in the Biotechnology industry to determine if it is a healthy dividend paying stock that investors should consider as a solid income generating addition to their portfolios or not. PDL BioPharma Inc is currently priced at $7.14 after moving up 0.35% in the previous day of trading.
PDLI is currently paying an annualized dividend of $0.60 per share, translating to a dividend yield of approximately 8.90%. Generally we would consider a stock paying a dividend greater than 80% of its earnings to be risky.
This is due to the possibility that they will be unable to afford to pay the dividend in the future due to having no reserves and also not having cash reserves available for emergencies. PDL BioPharma Inc (NASDAQ:PDLI) currently has a dividend pay out ratio of 29.90%, therefore we consider PDLI’s dividend to be relatively safe, in this respect.
The next assessment we perform is by determining the quick ratio of PDLI. The quick ratio tells us if a company will be able to cover all of its current liabilities with liquid assets on hand. As a rule of thumb a number of 1.0 or better indicates this is likely, meaning the stock’s dividend is less risky. PDL BioPharma Inc currently has a quick ratio of 1.90, meaning it is in a relatively safe position.
Finally we look at the estimated earnings growth for PDL BioPharma Inc (NASDAQ:PDLI) over the coming 5 years. Generally if earnings are predicted to continue to grow, one can expect there to be continued earnings from which to pay dividends.
PDL BioPharma Inc has an estimated annual growth over the next 5 years of 14.00%. This means that it would appear PDLI should be able to maintain and grow their dividend.
