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Have you been keeping an eye on Petronet LNG Limited’s (NSE:PETRONET) upcoming dividend of ₹4.50 per share payable on the 14 October 2018? Then you only have 2 days left before the stock starts trading ex-dividend on the 06 September 2018. Should you diversify into Petronet LNG and boost your portfolio income stream? Well, keep on reading because today, 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 Petronet LNG

5 questions to ask before buying a dividend stock

When researching a dividend stock, I always follow the following screening criteria:

• Is its annual yield among the top 25% of dividend-paying companies?

• Has it paid dividend every year without dramatically reducing payout in the past?

• Has the amount of dividend per share grown over the past?

• Is is able to pay the current rate of dividends from its earnings?

• Will the company be able to keep paying dividend based on the future earnings growth?

How does Petronet LNG fare?

The company currently pays out 32.0% of its earnings as a dividend, according to its trailing twelve-month data, which means that the dividend is covered by earnings. Going forward, analysts expect PETRONET’s payout to remain around the same level at 30.8% of its earnings, which leads to a dividend yield of around 2.2%. Moreover, EPS should increase to ₹15.56.

If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. Although PETRONET’s per share payments have increased in the past 10 years, it has not been a completely smooth ride. Shareholders would have seen a few years of reduced payments in this time.

Relative to peers, Petronet LNG has a yield of 1.8%, which is on the low-side for Oil and Gas stocks.

Next Steps:

Taking into account the dividend metrics, Petronet LNG 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. I’ve put together three relevant aspects you should look at:

1. Future Outlook: What are well-informed industry analysts predicting for PETRONET’s future growth? Take a look at our free research report of analyst consensus for PETRONET’s outlook.

2. Valuation: What is PETRONET 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 PETRONET is currently mispriced by the market.

3. 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.