If you are interested in cashing in on United Technologies Corporation’s (NYSE:UTX) upcoming dividend of $0.7 per share, you only have 3 days left to buy the shares before its ex-dividend date, 17 May 2018, in time for dividends payable on the 10 June 2018. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I examine United Technologies’s latest financial data to analyse its dividend characteristics. View our latest analysis for United Technologies
5 checks you should do on a dividend stock
If you are a dividend investor, you should always assess these five key metrics:
- 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 it increased its dividend per share amount over the past?
- Is its earnings sufficient to payout dividend at the current rate?
- Will the company be able to keep paying dividend based on the future earnings growth?
Does United Technologies pass our checks?
The company currently pays out 48.80% of its earnings as a dividend, according to its trailing twelve-month data, which means that the dividend is covered by earnings. However, going forward, analysts expect UTX’s payout to fall to 41.38% of its earnings, which leads to a dividend yield of 2.49%. However, EPS should increase to $7.15, 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. UTX has increased its DPS from $1.28 to $2.8 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 UTX a true dividend rockstar. Relative to peers, United Technologies generates a yield of 2.25%, which is high for Aerospace & Defense stocks but still below the market’s top dividend payers.
With these dividend metrics in mind, I definitely rank United Technologies as a strong income stock, and is worth further research for anyone who considers dividends an important part of their portfolio strategy. Given that 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. I’ve put together three key factors you should further research:
- Future Outlook: What are well-informed industry analysts predicting for UTX’s future growth? Take a look at our free research report of analyst consensus for UTX’s outlook.
- Valuation: What is UTX 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 UTX is currently mispriced by the market.
- 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 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.