Attention dividend hunters! APA Group (ASX:APA) will be distributing its dividend of A$0.21 per share on the 14 March 2018, and will start trading ex-dividend in 3 days time on the 28 December 2017. Is this future income a persuasive enough catalyst for investors to think about APA Group as an investment today? Below, I’m going to look at the latest data and analyze the stock and its dividend property in further detail. View our latest analysis for APA Group
5 questions I ask before picking a dividend stock
When assessing a stock as a potential addition to my dividend Portfolio, I look at these five areas:
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Is it paying an annual yield above 75% of dividend payers?
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Does it consistently pay out dividends without missing a payment of significantly cutting payout?
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Has dividend per share amount increased over the past?
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Does earnings amply cover its dividend payments?
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Will it have the ability to keep paying its dividends going forward?
How well does APA Group fit our criteria?
APA currently pays out twice what it is earning, which suggests that the dividend is not well-covered by earnings by any means. In the near future, analysts are predicting a more sensible payout ratio of 165.34%, leading to a dividend yield of 5.55%. In addition to this, EPS should increase to A$0.23, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment. 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. In the case of APA it has increased its DPS from A$0.28 to A$0.44 in the past 10 years. It has also been paying out dividend consistently during this time, as you’d expect for a company increasing its dividend levels. This is an impressive feat, which makes APA a true dividend rockstar. In terms of its peers, APA Group produces a yield of 5.04%, which is high for gas utilities stocks.
What this means for you:
Are you a shareholder? With APA Group producing strong dividend income for your portfolio over the past few years, you can take comfort in knowing that this stock will still continue to be a robust dividend generator moving forward. But, depending on your portfolio composition, it may be beneficial exploring other income stocks to increase diversification, or even look at high-growth stocks to complement your steady income stocks. I recommend continuing your research by taking a look at my interactive free list of dividend rockstars as well as high-growth stocks to potentially add to your holdings.