Rubis (EPA:RUI) has pleased shareholders over the past 10 years, by paying out dividends. The company currently pays out a dividend yield of 3.2% to shareholders, making it a relatively attractive dividend stock. Does Rubis tick all the boxes of a great dividend stock? Below, I’ll take you through my analysis.
Here’s how I find good dividend stocks
When assessing a stock as a potential addition to my dividend Portfolio, I look at these five areas:
- Is their annual yield among the top 25% of dividend payers?
- Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?
- Has it increased its dividend per share amount over the past?
- Is is able to pay the current rate of dividends from its earnings?
- Will the company be able to keep paying dividend based on the future earnings growth?
How does Rubis fare?
Rubis has a trailing twelve-month payout ratio of 55%, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting a payout ratio of 54%, leading to a dividend yield of 3.5%. Moreover, EPS should increase to €2.96.
When thinking about whether a dividend is sustainable, another factor to consider is the cash flow. 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. RUI has increased its DPS from €0.61 to €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 RUI a true dividend rockstar.
In terms of its peers, Rubis produces a yield of 3.2%, which is high for Gas Utilities stocks but still below the market’s top dividend payers.
Taking into account the dividend metrics, Rubis ticks most of the boxes as a strong dividend investment, putting it in my list of top dividend payers. 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 important factors you should further research:
- Future Outlook: What are well-informed industry analysts predicting for RUI’s future growth? Take a look at our free research report of analyst consensus for RUI’s outlook.
- Valuation: What is RUI 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 RUI 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 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 firstname.lastname@example.org.