Attention dividend hunters! Adams Resources & Energy Inc (AMEX:AE) will be distributing its dividend of $0.22 per share in 3 days time, on the 19 December 2017, and will start trading ex-dividend on the 04 December 2017. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I examine AE’s latest financial data to analyse its dividend characteristics. View our latest analysis for Adams Resources & Energy
5 checks you should use to assess a dividend stock
When researching a dividend stock, I always follow the following screening criteria:
- Is it the top 25% annual dividend yield payer?
- Does it consistently pay out dividends without missing a payment of significantly cutting payout?
- Has dividend per share risen in the past couple of years?
- Does earnings amply cover its dividend payments?
- Will it be able to continue to payout at the current rate in the future?
How well does Adams Resources & Energy fit our criteria?
Adams Resources & Energy has a negative payout ratio, meaning that the company is not yet profitable and is paying dividend by dipping into its retained earnings. If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. In the case of AE it has increased its DPS from $0.47 to $0.88 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. Compared to its peers, Adams Resources & Energy produces a yield of 1.89%, which is on the low-side for oil, gas and consumable fuels stocks.
What this means for you:
Are you a shareholder? You may be wondering why Adams Resources & Energy is paying out dividends at all, instead of re-investing into the business to generate higher cash flows in the future. It may be beneficial exploring other dividend stocks as alternatives to AE or even look at high-growth stocks to complement your steady income stocks. I encourage you to continue your research by taking a look at my interactive free list of dividend rockstars as well as high-growth stocks to potentially add to your holdings.
Are you a potential investor? After digging a little deeper into AE’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, AE could still be offering some interesting investment opportunities. I also recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. Check our latest free fundmental analysis to explore other aspects of AE.
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.