There is a lot to be liked about MDU Resources Group Inc (NYSE:MDU) as an income stock, over the past 10 years it has returned an average of 3.00% per year. The company currently pays out a dividend yield of 3.14% to shareholders, making it a relatively attractive dividend stock. Does MDU Resources Group tick all the boxes of a great dividend stock? Below, I’ll take you through my analysis. View our latest analysis for MDU Resources Group
5 checks you should do on 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?
- Is its earnings sufficient to payout dividend at the current rate?
- Will the company be able to keep paying dividend based on the future earnings growth?
How does MDU Resources Group fare?
The company currently pays out 63.94% of its earnings as a dividend, according to its trailing twelve-month data, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting lower payout ratio of 54.53%, leading to a dividend yield of 3.14%.
If dividend is a key criteria in your investment consideration, then you need to make sure the dividend stock you’re eyeing out is reliable in its payments. In the case of MDU it has increased its DPS from $0.58 to $0.79 in the past 10 years. During this period it has not missed a payment, as one would expect for a company increasing its dividend. These are all positive signs of a great, reliable dividend stock. Relative to peers, MDU Resources Group produces a yield of 3.14%, which is on the low-side for Integrated Utilities stocks.
Keeping in mind the dividend characteristics above, MDU Resources Group 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. There are three pertinent aspects you should further research:
- 1. Valuation: What is MDU 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 MDU is currently mispriced by the market.
- 2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on MDU Resources Group’s board and the CEO’s back ground.
- 3. 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.