Dividends play an important role in compounding returns in the long run and end up forming a sizeable part of investment returns. Cheniere Energy Partners LP Holdings LLC (AMEX:CQH) has returned to shareholders over the past 4 years, an average dividend yield of 2.00% annually. Does Cheniere Energy Partners Holdings tick all the boxes of a great dividend stock? Below, I’ll take you through my analysis. See our latest analysis for Cheniere Energy Partners Holdings
5 questions I ask before picking 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 the amount of dividend per share grown over the past?
- Is is able 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?
Does Cheniere Energy Partners Holdings pass our checks?
The company currently pays out 150.69% of its earnings as a dividend, according to its trailing twelve-month data, meaning the dividend is not sufficiently covered by its earnings. Going forward, analysts expect CQH’s payout to reduce to 100.32% of its earnings, which leads to a dividend yield of 7.94%. However, EPS should increase to $2.05, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment. 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 Cheniere Energy Partners Holdings as a dividend investment. It has only been consistently paying dividends for 4 years, however, standard practice for reliable payers is to look for a 10-year minimum track record. In terms of its peers, Cheniere Energy Partners Holdings generates a yield of 7.43%, which is high for Oil and Gas stocks.
Now you know to keep in mind the reason why investors should be careful investing in Cheniere Energy Partners 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 further examine:
- Future Outlook: What are well-informed industry analysts predicting for CQH’s future growth? Take a look at our free research report of analyst consensus for CQH’s outlook.
- Valuation: What is CQH 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 CQH 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 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.