Important news for shareholders and potential investors in Global Water Resources Inc (NASDAQ:GWRS): The dividend payment of $0.02 per share will be distributed into shareholder on 30 January 2018, and the stock will begin trading ex-dividend at an earlier date, 12 January 2018. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I take a deeper dive into Global Water Resources’s latest financial data to analyse its dividend attributes. Check out our latest analysis for Global Water Resources
5 questions to ask before buying a dividend stock
When researching a dividend stock, I always follow the following screening criteria:
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Does it pay an annual yield higher than 75% of dividend payers?
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Has it paid dividend every year without dramatically reducing payout in the past?
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Has dividend per share risen in the past couple of years?
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Is its earnings sufficient to payout dividend at the current rate?
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Will the company be able to keep paying dividend based on the future earnings growth?
Does Global Water Resources pass our checks?
The company currently pays out more than double of its earnings as a dividend, meaning that the dividend is predominantly funded by retained 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. The reality is that it is too early to consider Global Water Resources as a dividend investment. It has only been consistently paying dividends for 2 years, however, standard practice for reliable payers is to look for a 10-year minimum track record. Relative to peers, Global Water Resources has a yield of 3.09%, which is on the low-side for water utilities stocks.
What this means for you:
Are you a shareholder? Investors may not have the best feeling about their investment in Global Water Resources right now, in terms of its dividend attributes. It may be valuable exploring other dividend stocks as alternatives to Global Water Resources or even look at high-growth stocks to supplement your steady income stocks. I suggest continuing your research by exploring my interactive free list of dividend rockstars as well as high-growth stocks to potentially add to your holdings.
Are you a potential investor? Now you know to keep in mind the reason why investors should be careful investing in Global Water Resources for the dividend. On the other hand, if you are not strictly just a dividend investor, the stock could still be offering some interesting investment opportunities. As always, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. Dig deeper in our latest free fundmental analysis to explore other aspects of Global Water Resources.
To help readers see pass 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.