Is Buying Western Gas Partners LP (NYSE:WES) For Its Upcoming $0.94 Dividend A Good Choice?
Important news for shareholders and potential investors in Western Gas Partners LP (NYSE:WES): The dividend payment of $0.94 per share will be distributed into shareholder on 14 May 2018, and the stock will begin trading ex-dividend at an earlier date, 01 May 2018. What does this mean for current shareholders and potential investors? Below, I will explain how holding Western Gas Partners can impact your portfolio income stream, by analysing the stock’s most recent financial data and dividend attributes. View our latest analysis for Western Gas Partners
How I analyze a dividend stock
If you are a dividend investor, you should always assess these five key metrics:
Is their annual yield among the top 25% of dividend payers?
Has it paid dividend every year without dramatically reducing payout in the past?
Has dividend per share amount increased over the past?
Can it afford to pay the current rate of dividends from its earnings?
Based on future earnings growth, will it be able to continue to payout dividend at the current rate?
How does Western Gas Partners fare?
Western Gas Partners has a trailing twelve-month payout ratio of more than 200% of earnings, which suggests that the dividend is not well-covered by earnings by any means. In the near future, analysts are predicting a more sensible payout ratio of 137.05%, leading to a dividend yield of around 8.62%. Moreover, EPS should increase to $2.08, 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. WES has increased its DPS from $1.2 to $3.74 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 WES a true dividend rockstar. In terms of its peers, Western Gas Partners has a yield of 7.90%, which is high for Oil and Gas stocks.
Next Steps:
Keeping in mind the dividend characteristics above, Western Gas Partners is definitely worth considering for investors looking to build a dedicated income portfolio. 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 pertinent aspects you should further research:
Future Outlook: What are well-informed industry analysts predicting for WES’s future growth? Take a look at our free research report of analyst consensus for WES’s outlook.
Valuation: What is WES 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 WES 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.
