Is Ecofin Global Utilities and Infrastructure Trust plc (LON:EGL) A Good Choice For Dividend Investors?
Dividends can be underrated but they form a large part of investment returns, playing an important role in compounding returns in the long run. Recently, Ecofin Global Utilities and Infrastructure Trust plc (LSE:EGL) has returned an average of 5.00% per year to shareholders in terms of dividend yield. Should it have a place in your portfolio? Let’s take a look at Ecofin Global Utilities and Infrastructure Trust in more detail. See our latest analysis for Ecofin Global Utilities and Infrastructure Trust
5 checks you should do on a dividend stock
If you are a dividend investor, you should always assess these five key metrics:
Is it the top 25% annual dividend yield payer?
Has it consistently paid a stable dividend without missing a payment or drastically cutting payout?
Has the amount of dividend per share grown 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?
Does Ecofin Global Utilities and Infrastructure Trust pass our checks?
The current payout ratio for the stock is 43.81%, meaning the dividend is sufficiently covered by earnings. Furthermore, analysts have not forecasted a dividends per share for the future, which makes it hard to determine the yield shareholders should expect, and whether the current payout is sustainable, moving forward. If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. The reality is that it is too early to consider Ecofin Global Utilities and Infrastructure Trust as a dividend investment. It has only been paying out dividend for the past one year. Generally, the rule of thumb for determining whether a stock is a reliable dividend payer is that it should be consistently paying dividends for the past 10 years or more. Clearly there’s a long road ahead before we can ascertain whether EGL one as a stable dividend player. Relative to peers, Ecofin Global Utilities and Infrastructure Trust produces a yield of 4.97%, which is high for capital markets stocks.
Next Steps:
If Ecofin Global Utilities and Infrastructure Trust is in your portfolio for cash-generating reasons, there may be better alternatives out there. 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. I’ve put together three key factors you should further examine:
1. Valuation: What is EGL 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 EGL is currently mispriced by the market.
2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Ecofin Global Utilities and Infrastructure Trust’s board and the CEO’s back ground.
3. 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.
