What Makes State Street Corporation (NYSE:STT) A Great Dividend Stock?
Over the past 10 years State Street Corporation (NYSE:STT) has returned an average of 2.00% per year from dividend payouts. The company is currently worth US$36.29B, and now yields roughly 1.69%. Should it have a place in your portfolio? Let’s take a look at State Street in more detail. View our latest analysis for State Street
5 questions to ask before buying a dividend stock
When researching a dividend stock, I always follow the following screening criteria:
Is its annual yield among the top 25% of dividend payers?
Has it consistently paid a stable dividend without missing a payment or drastically cutting payout?
Has the amount of dividend per share grown over the past?
Does earnings amply cover its dividend payments?
Will it have the ability to keep paying its dividends going forward?
How does State Street fare?
The current trailing twelve-month payout ratio for the stock is 28.30%, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting lower payout ratio of 23.95%, leading to a dividend yield of around 1.99%. However, EPS should increase to $7.91, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment. 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. STT has increased its DPS from $0.92 to $1.68 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, State Street has a yield of 1.69%, which is on the low-side for Capital Markets stocks.
Next Steps:
Keeping in mind the dividend characteristics above, State Street is definitely worth considering for investors looking to build a dedicated income portfolio. 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 relevant aspects you should look at:
Future Outlook: What are well-informed industry analysts predicting for STT’s future growth? Take a look at our free research report of analyst consensus for STT’s outlook.
Valuation: What is STT 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 STT 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.
