Dividends play an important role in compounding returns in the long run and end up forming a sizeable part of investment returns. EQT GP Holdings LP (NYSE:EQGP) has returned to shareholders over the past 3 years, an average dividend yield of 3.00% annually. Does EQT GP Holdings tick all the boxes of a great dividend stock? Below, I’ll take you through my analysis. View out our latest analysis for EQT GP 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 the top 25% annual dividend yield payer?
- Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?
- Has the amount of dividend per share grown over the past?
- Can it afford to pay the current rate of dividends from its earnings?
- Will the company be able to keep paying dividend based on the future earnings growth?
How does EQT GP Holdings fare?
EQT GP Holdings has a trailing twelve-month payout ratio of 88.95%, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting a higher payout ratio of 122.71%, leading to a dividend yield of 6.42%. In addition to this, EPS should increase to $1.22. The higher payout forecasted, along with higher earnings, should lead to greater dividend income for investors moving forward. However this does bring about uncertainty around the sustainability of the payout ratio.
If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. Unfortunately, it is really too early to view EQT GP Holdings as a dividend investment. It has only been consistently paying dividends for 3 years, however, standard practice for reliable payers is to look for a 10-year minimum track record.
In terms of its peers, EQT GP Holdings generates a yield of 4.15%, which is on the low-side for Oil and Gas stocks.
If you are building an income portfolio, then EQT GP Holdings is a complicated choice since it has some positive aspects as well as negative ones. However, if you are not strictly just a dividend investor, the stock could still offer some interesting investment opportunities. 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 key factors you should further research:
- Future Outlook: What are well-informed industry analysts predicting for EQGP’s future growth? Take a look at our free research report of analyst consensus for EQGP’s outlook.
- Valuation: What is EQGP 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 EQGP 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.