There is a lot to be liked about CF Industries Holdings Inc (NYSE:CF) as an income stock, over the past 10 years it has returned an average of 2.00% per year. The stock currently pays out a dividend yield of 2.92%, and has a market cap of US$9.46B. Should it have a place in your portfolio? Let’s take a look at CF Industries Holdings in more detail. View our latest analysis for CF Industries Holdings
5 questions I ask before picking a dividend stock
When assessing a stock as a potential addition to my dividend Portfolio, I look at these five areas:
- 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 dividend per share amount increased over the past?
- Does earnings amply cover its dividend payments?
- Will the company be able to keep paying dividend based on the future earnings growth?
How does CF Industries Holdings fare?
CF Industries Holdings has a trailing twelve-month payout ratio of 63.16%, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting lower payout ratio of 44.47%, leading to a dividend yield of around 2.94%. In addition to this, EPS is also forecasted to fall to $1.09 in the upcoming year. The lower EPS on top of a lower payout ratio will lead to a fall in dividend payment moving forward. 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. In the case of CF it has increased its DPS from $0.08 to $1.2 in the past 10 years. During this period it has not missed a payment, as one would expect for a company increasing its dividend. This is an impressive feat, which makes CF a true dividend rockstar. Compared to its peers, CF Industries Holdings generates a yield of 2.92%, which is high for Chemicals stocks but still below the market’s top dividend payers.
With this in mind, I definitely rank CF Industries Holdings as a strong dividend stock, and makes it worth further research for anyone who likes steady income generation from their 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. Below, I’ve compiled three essential aspects you should further examine:
- Future Outlook: What are well-informed industry analysts predicting for CF’s future growth? Take a look at our free research report of analyst consensus for CF’s outlook.
- Valuation: What is CF 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 CF 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.