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Is MDU Resources Group Inc (NYSE:MDU) A Good Choice For Dividend Investors?

Casey Hall

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?
NYSE:MDU Historical Dividend Yield Feb 7th 18

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.

Next Steps:

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:

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.