Investors who want to cash in on Woodside Petroleum Ltd’s (ASX:WPL) upcoming dividend of US$0.53 per share have only 2 days left to buy the shares before its ex-dividend date, 23 August 2018, in time for dividends payable on the 20 September 2018. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I examine Woodside Petroleum’s latest financial data to analyse its dividend characteristics.
See our latest analysis for Woodside Petroleum
5 questions to ask before buying 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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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 the amount of dividend per share grown over the past?
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Does earnings amply cover its dividend payments?
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Based on future earnings growth, will it be able to continue to payout dividend at the current rate?
How does Woodside Petroleum fare?
The company currently pays out 83.38% of its earnings as a dividend, according to its trailing twelve-month data, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting a payout ratio of 77.77%, leading to a dividend yield of around 5.39%. Furthermore, EPS should increase to $1.78.
If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. Whilst its per-share payments have increased during the past 10 years, there has been some hiccups. Shareholders would have seen a few years of reduced payments in this time.
In terms of its peers, Woodside Petroleum generates a yield of 3.96%, which is high for Oil and Gas stocks but still below the market’s top dividend payers.
Next Steps:
Taking into account the dividend metrics, Woodside Petroleum ticks most of the boxes as a strong dividend investment, putting it in my list of top dividend payers. Given that this is purely a dividend analysis, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. There are three essential aspects you should further research:
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Future Outlook: What are well-informed industry analysts predicting for WPL’s future growth? Take a look at our free research report of analyst consensus for WPL’s outlook.
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Valuation: What is WPL 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 WPL is currently mispriced by the market.
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Other 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 editorial-team@simplywallst.com.