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Over the past 10 years PPL Corporation (NYSE:PPL) has grown its dividend payouts from $1.34 to $1.65. With a market cap of US$21b, PPL pays out 67% of its earnings, leading to a 5.7% yield. Let me elaborate on you why the stock stands out for income investors like myself.
See our latest analysis for PPL
What Is A Dividend Rock Star?
It is a stock that pays a reliable and steady dividend over the past decade, at a rate that is competitive relative to the other dividend-paying companies on the market. More specifically:
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It is paying an annual yield above 75% of dividend payers
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It has paid dividend every year without dramatically reducing payout in the past
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Its dividend per share amount has increased over the past
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It is able to pay the current rate of dividends from its earnings
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It is able to continue to payout at the current rate in the future
High Yield And Dependable
The company's dividend yield stands at 5.7%, which is high for Electric Utilities stocks. But the real reason PPL stands out is because it has a proven track record of continuously paying out this level of dividends, from earnings, to shareholders and can be expected to continue paying in the future. This is a highly desirable trait for a stock holding if you're investor who wants a robust cash inflow from your portfolio over a long period of time.
Reliability 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. PPL has increased its DPS from $1.34 to $1.65 in the past 10 years. During this period it has not missed a payment, as one would expect for a company increasing its dividend. These are all positive signs of a great, reliable dividend stock.
The current trailing twelve-month payout ratio for the stock is 67%, which means that the dividend is covered by earnings. In the near future, analysts are predicting a payout ratio of 66% which, assuming the share price stays the same, leads to a dividend yield of around 5.8%. Furthermore, EPS should increase to $2.49.
When assessing the forecast sustainability of a dividend it is also worth considering the cash flow of the business. A company with strong cash flow, relative to earnings, can sometimes sustain a high pay out ratio.
Next Steps:
PPL's strong dividend attributes make it, without a doubt, a stock dividend investors should be considering for their portfolios. However, given this is purely a dividend analysis, you should always research extensively before deciding whether or not a stock is an appropriate investment for you. I always recommend analysing the company's fundamentals and underlying business before making an investment decision. Below, I've compiled three pertinent factors you should further research: