Should Income Investors Buy Inter Pipeline Ltd (TSX:IPL) Before Its Ex-Dividend?
Attention dividend hunters! Inter Pipeline Ltd (TSX:IPL) will be distributing its dividend of CA$0.14 per share in 3 days time, on the 15 December 2017, and will start trading ex-dividend on the 21 November 2017. Is this future income stream a compelling catalyst for dividend investors to think about IPL as an investment today? Let’s take a look at IPL’s most recent financial data to examine its dividend characteristics in more detail. See our latest analysis for IPL
5 checks you should use to assess a dividend stock
When researching a dividend stock, I always follow the following screening criteria:
Is it the top 25% annual dividend yield payer?
Has it paid dividend every year without dramatically reducing payout in the past?
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 Inter Pipeline fare?
The current payout ratio for IPL is 116.87%, which means that the dividend is not well-covered by its earnings. Going forward, analysts expect IPL’s payout to remain around the same level at 112.36% of its earnings, which leads to a dividend yield of around 6.42%. Furthermore, EPS should increase to CA$1.55. If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. IPL has increased its DPS from CA$0.84 to CA$1.68 in the past 10 years. During this period it has not missed a payment, as one would expect for a company increasing its dividend. These are all positive signs of a great, reliable dividend stock. Compared to its peers, Inter Pipeline produces a yield of 6.36%, which is high for oil, gas and consumable fuels stocks.
What this means for you:
Are you a shareholder?
Are you a shareholder? Investors of Inter Pipeline can continue to expect strong dividends from the stock moving forward. With its favorable dividend characteristics, IPL is one worth keeping around in your income portfolio. However, depending on your current holdings, it may be worth exploring other income stocks to improve your diversification, or even look at high-growth stocks to supplement your steady income stocks. I recommend continuing your research by exploring my interactive free list of dividend rockstars as well as high-growth stocks to potentially add to your holdings.
Are you a potential investor? Considering the dividend attributes we analyzed above, IPL is definitely worth keeping an eye on for someone looking to build a dedicated income portfolio. I also recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. No matter how much of a cash cow Inter Pipeline is, it is not worth an infinite price. Is IPL still a bargain? Take a look at our latest free analysis to find out!
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.
