Attention dividend hunters! Inter Pipeline Ltd (TSX:IPL) will be distributing its dividend of CA$0.14 per share on the 15 June 2018, and will start trading ex-dividend in 3 days time on the 22 May 2018. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I examine Inter Pipeline’s latest financial data to analyse its dividend characteristics. See our latest analysis for Inter Pipeline
5 checks you should use to assess a dividend stock
Whenever I am looking at a potential dividend stock investment, I always check these five metrics:
- Is its annual yield among the top 25% of dividend-paying companies?
- 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?
- 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 well does Inter Pipeline fit our criteria?
Inter Pipeline has a trailing twelve-month payout ratio of 117.07%, which means that the dividend is not well-covered by its earnings. In the near future, analysts are predicting a higher payout ratio of 142.20%, leading to a dividend yield of 7.21%. Moreover, EPS should increase to CA$1.47. The higher payout forecasted, along with higher earnings, should lead to greater dividend income for investors moving forward. 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. In the case of IPL it 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. This is an impressive feat, which makes IPL a true dividend rockstar. Compared to its peers, Inter Pipeline generates a yield of 7.02%, which is high for Oil and Gas stocks.
With this in mind, I definitely rank Inter Pipeline 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, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. Below, I’ve compiled three important aspects you should further examine:
- Future Outlook: What are well-informed industry analysts predicting for IPL’s future growth? Take a look at our free research report of analyst consensus for IPL’s outlook.
- Valuation: What is IPL 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 IPL 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.
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.