Investors who want to cash in on DTE Energy Company’s (NYSE:DTE) upcoming dividend of US$0.88 per share have only 3 days left to buy the shares before its ex-dividend date, 14 September 2018, in time for dividends payable on the 15 October 2018. Should you diversify into DTE Energy and boost your portfolio income stream? Well, keep on reading because today, I’m going to look at the latest data and analyze the stock and its dividend property in further detail.
5 checks you should do on 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 it increased its dividend per share amount 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 DTE Energy pass our checks?
The current trailing twelve-month payout ratio for the stock is 54.2%, which means that the dividend is covered by earnings. In the near future, analysts are predicting a higher payout ratio of 61.0%, leading to a dividend yield of 3.4%. However, EPS is forecasted to fall to $6.29 in the upcoming year. Therefore, although payout is expected to increase, the fall in earnings may not equate to higher dividend income.
When thinking about whether a dividend is sustainable, another factor to consider is the cash flow. Companies with strong cash flow can sustain a higher payout ratio, while companies with weaker cash flow generally cannot.
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. DTE has increased its DPS from $2.12 to $3.53 in the past 10 years. It has also been paying out dividend consistently during this time, as you’d expect for a company increasing its dividend levels. These are all positive signs of a great, reliable dividend stock.
Relative to peers, DTE Energy has a yield of 3.1%, which is on the low-side for Integrated Utilities stocks.
Considering the dividend attributes we analyzed above, DTE Energy 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 urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. I’ve put together three relevant aspects you should further research:
- Future Outlook: What are well-informed industry analysts predicting for DTE’s future growth? Take a look at our free research report of analyst consensus for DTE’s outlook.
- Historical Performance: What has DTE’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 past 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. For errors that warrant correction please contact the editor at email@example.com.