How Does Power Grid Corporation of India Limited (NSE:POWERGRID) Fare As A Dividend Stock?
There is a lot to be liked about Power Grid Corporation of India Limited (NSEI:POWERGRID) as an income stock, over the past 10 years it has returned an average of 2.00% per year. The company currently pays out a dividend yield of 2.77% to shareholders, making it a relatively attractive dividend stock. Does Power Grid of India tick all the boxes of a great dividend stock? Below, I’ll take you through my analysis. View our latest analysis for Power Grid of India
How I analyze 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?
Has it consistently paid a stable dividend without missing a payment or drastically cutting payout?
Has dividend per share risen in the past couple of years?
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 Power Grid of India fit our criteria?
Power Grid of India has a trailing twelve-month payout ratio of 30.54%, meaning the dividend is sufficiently covered by earnings. Going forward, analysts expect POWERGRID’s payout to remain around the same level at 29.19% of its earnings, which leads to a dividend yield of around 2.84%. Moreover, EPS should increase to ₹16.89. 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. Whilst its per-share payments have increased during the past 10 years, there has been some hiccups. Shareholders would have seen a few years of reduced payments in this time. Relative to peers, Power Grid of India generates a yield of 2.77%, which is high for Electric Utilities stocks.
Next Steps:
Considering the dividend attributes we analyzed above, Power Grid of India 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 essential factors you should further research:
Future Outlook: What are well-informed industry analysts predicting for POWERGRID’s future growth? Take a look at our free research report of analyst consensus for POWERGRID’s outlook.
Historical Performance: What has POWERGRID’s returns been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
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.
