Attention dividend hunters! Aurizon Holdings Limited (ASX:AZJ) will be distributing its dividend of AU$0.13 per share on the 24 September 2018, and will start trading ex-dividend in 2 days time on the 27 August 2018. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I examine Aurizon Holdings’s latest financial data to analyse its dividend characteristics.
5 checks you should do on a dividend stock
Whenever I am looking at a potential dividend stock investment, I always check these five metrics:
- Does it pay an annual yield higher than 75% of dividend payers?
- Does it consistently pay out dividends without missing a payment of significantly cutting payout?
- Has dividend per share amount increased over the past?
- Is is able to pay the current rate of dividends from its earnings?
- Will it have the ability to keep paying its dividends going forward?
How well does Aurizon Holdings fit our criteria?
The company currently pays out 97.41% of its earnings as a dividend, according to its trailing twelve-month data, which means that the dividend is not well-covered by its earnings. Going forward, analysts expect AZJ’s payout to remain around the same level at 96.41% of its earnings, which leads to a dividend yield of 5.08%. Moreover, EPS is forecasted to fall to A$0.25 in the upcoming year.
If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. Unfortunately, it is really too early to view Aurizon Holdings as a dividend investment. It has only been consistently paying dividends for 8 years, however, standard practice for reliable payers is to look for a 10-year minimum track record.
Compared to its peers, Aurizon Holdings produces a yield of 6.12%, which is high for Transportation stocks.
Now you know to keep in mind the reason why investors should be careful investing in Aurizon Holdings for the dividend. But if you are not exclusively a dividend investor, the stock could still be an interesting investment opportunity. 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. There are three key factors you should look at:
- Future Outlook: What are well-informed industry analysts predicting for AZJ’s future growth? Take a look at our free research report of analyst consensus for AZJ’s outlook.
- Valuation: What is AZJ 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 AZJ 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 email@example.com.