Have you been keeping an eye on Canadian Natural Resources Limited’s (TSE:CNQ) upcoming dividend of CA$0.38 per share payable on the 01 April 2019? Then you only have 3 days left before the stock starts trading ex-dividend on the 21 March 2019. Should you diversify into Canadian Natural Resources 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
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 amount increased over the past?
- Is its earnings sufficient to payout dividend at the current rate?
- Based on future earnings growth, will it be able to continue to payout dividend at the current rate?
How does Canadian Natural Resources fare?
Canadian Natural Resources has a trailing twelve-month payout ratio of 63%, meaning the dividend is sufficiently covered by earnings. Going forward, analysts expect CNQ’s payout to remain around the same level at 59% of its earnings. Assuming a constant share price, this equates to a dividend yield of 4.1%. In addition to this, EPS is forecasted to fall to CA$1.83 in the upcoming year.
If you want to dive deeper into the sustainability of a certain payout ratio, you may wish to consider the cash flow of the business. A company with strong cash flow, relative to earnings, can sometimes sustain a high pay out ratio.
If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. In the case of CNQ it has increased its DPS from CA$0.21 to CA$1.5 in the past 10 years. During this period it has not missed a payment, as one would expect for a company increasing its dividend. This is an impressive feat, which makes CNQ a true dividend rockstar.
In terms of its peers, Canadian Natural Resources generates a yield of 4.1%, which is on the low-side for Oil and Gas stocks.
With this in mind, I definitely rank Canadian Natural Resources as a strong dividend stock, and makes it worth further research for anyone who likes steady income generation from their portfolio. 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. Below, I’ve compiled three relevant factors you should further research:
- Future Outlook: What are well-informed industry analysts predicting for CNQ’s future growth? Take a look at our free research report of analyst consensus for CNQ’s outlook.
- Valuation: What is CNQ 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 CNQ is currently mispriced by the market.
- Other Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.