Income Investors Should Steer Clear of Global Water Resources Inc (NASDAQ:GWRS)
Dividends play an important role in compounding returns in the long run and end up forming a sizeable part of investment returns. Over the past 2 years, Global Water Resources Inc (NASDAQ:GWRS) has returned an average of 4.00% per year to shareholders in terms of dividend yield. Let’s dig deeper into whether Global Water Resources should have a place in your portfolio. See our latest analysis for Global Water Resources
5 checks you should do on a dividend stock
Whenever I am looking at a potential dividend stock investment, I always check these five metrics:
Is their annual yield among the top 25% of dividend payers?
Does it consistently pay out dividends without missing a payment of significantly cutting payout?
Has dividend per share risen in the past couple of years?
Does earnings amply cover its dividend payments?
Will it be able to continue to payout at the current rate in the future?
Does Global Water Resources pass our checks?
GWRS currently pays out twice what it is earning, according to its trailing twelve-month data, which suggests that the dividend is not well-covered by earnings by any means. 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’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. The reality is that it is too early to consider Global Water Resources as a dividend investment. It has only been consistently paying dividends for 2 years, however, standard practice for reliable payers is to look for a 10-year minimum track record. Relative to peers, Global Water Resources generates a yield of 3.12%, which is on the low-side for Water Utilities stocks.
Next Steps:
Now you know to keep in mind the reason why investors should be careful investing in Global Water Resources for the dividend. On the other hand, if you are not strictly just a dividend investor, the stock could still be offering 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 aspects you should further research:
Future Outlook: What are well-informed industry analysts predicting for GWRS’s future growth? Take a look at our free research report of analyst consensus for GWRS’s outlook.
Historical Performance: What has GWRS’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.
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.
