Does Air Products and Chemicals Inc (NYSE:APD) Have A Place In Your Portfolio?
There is a lot to be liked about Air Products and Chemicals Inc (NYSE:APD) as an income stock, over the past 10 years it has returned an average of 3.00% per year. The stock currently pays out a dividend yield of 2.69%, and has a market cap of US$35.84B. Should it have a place in your portfolio? Let’s take a look at Air Products and Chemicals in more detail. See our latest analysis for Air Products and Chemicals
Here’s how I find good dividend stocks
If you are a dividend investor, you should always assess these five key metrics:
Is it paying an annual yield above 75% of dividend payers?
Does it consistently pay out dividends without missing a payment or significantly cutting payout?
Has the amount of dividend per share grown over the past?
Is its earnings sufficient to payout dividend at the current rate?
Will it have the ability to keep paying its dividends going forward?
How well does Air Products and Chemicals fit our criteria?
The current trailing twelve-month payout ratio for the stock is 75.09%, which means that the dividend is covered by earnings. However, going forward, analysts expect APD’s payout to fall to 53.75% of its earnings, which leads to a dividend yield of 2.68%. However, EPS should increase to $7.48, 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. APD has increased its DPS from $1.76 to $4.4 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 APD a true dividend rockstar. In terms of its peers, Air Products and Chemicals has a yield of 2.69%, which is high for Chemicals stocks but still below the market’s top dividend payers.
Next Steps:
Considering the dividend attributes we analyzed above, Air Products and Chemicals is definitely worth keeping an eye on for someone looking to build a dedicated income portfolio. 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. I’ve put together three important factors you should further examine:
Future Outlook: What are well-informed industry analysts predicting for APD’s future growth? Take a look at our free research report of analyst consensus for APD’s outlook.
Valuation: What is APD 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 APD 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.
