If you are interested in cashing in on GasLog Ltd’s (NYSE:GLOG) upcoming dividend of US$0.40 per share, you only have 4 days left to buy the shares before its ex-dividend date, 07 December 2018, in time for dividends payable on the 17 December 2018. Is this future income stream a compelling catalyst for dividend investors to think about the stock as an investment today? Let’s take a look at GasLog’s most recent financial data to examine its dividend characteristics in more detail.
Here’s how I find good dividend stocks
When assessing a stock as a potential addition to my dividend Portfolio, I look at these five areas:
- Is their annual yield among the top 25% of dividend payers?
- Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?
- Has it increased its dividend per share amount over the past?
- Is its earnings sufficient to payout dividend at the current rate?
- Will it be able to continue to payout at the current rate in the future?
How well does GasLog fit our criteria?
GasLog has a trailing twelve-month payout ratio of 143%, meaning the dividend is not sufficiently covered by its earnings. However, going forward, analysts expect GLOG’s payout to fall into a more sustainable range of 44% of its earnings, which leads to a dividend yield of around 2.9%. Furthermore, EPS should increase to $0.97, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment.
If you want to dive deeper into the sustainability of a certain payout ratio, you may wish to consider the cash flow of the business. A company with strong cash flow, relative to earnings, can sometimes sustain a high pay out ratio.
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. Unfortunately, it is really too early to view GasLog as a dividend investment. It has only been consistently paying dividends for 7 years, however, standard practice for reliable payers is to look for a 10-year minimum track record.
Relative to peers, GasLog generates a yield of 2.9%, which is on the low-side for Oil and Gas stocks.
After digging a little deeper into GasLog’s yield, it’s easy to see why you should be cautious investing in the company just 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. Given that this is purely a dividend analysis, I recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. Below, I’ve compiled three key factors you should further research:
- Future Outlook: What are well-informed industry analysts predicting for GLOG’s future growth? Take a look at our free research report of analyst consensus for GLOG’s outlook.
- Valuation: What is GLOG 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 GLOG is currently mispriced by the market.
- 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 firstname.lastname@example.org.