Should NTPC Limited (NSE:NTPC) Be Part Of Your Dividend Portfolio?
NTPC Limited (NSEI:NTPC) has pleased shareholders over the past 10 years, paying out an average dividend of 3.00% annually. The stock currently pays out a dividend yield of 3.28%, and has a market cap of ₹1.29T. Does NTPC tick all the boxes of a great dividend stock? Below, I’ll take you through my analysis. Check out our latest analysis for NTPC
5 questions to ask before buying 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 payers?
Does it consistently pay out dividends without missing a payment or significantly cutting payout?
Has dividend per share amount increased over the past?
Can it afford to pay the current rate of dividends from its earnings?
Will it have the ability to keep paying its dividends going forward?
How does NTPC fare?
The current trailing twelve-month payout ratio for the stock is 40.03%, which means that the dividend is covered by earnings. In the near future, analysts are predicting a higher payout ratio of 46.95%, leading to a dividend yield of 4.22%. In addition to this, EPS should increase to ₹14.94. 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. Whilst its per-share payments have increased during the past 10 years, there has been some hiccups. Shareholders would have seen a few years of reduced payments in this time. Compared to its peers, NTPC generates a yield of 3.28%, which is on the low-side for Renewable Energy stocks.
Next Steps:
Considering the dividend attributes we analyzed above, NTPC is definitely worth keeping an eye on for someone looking to build a dedicated income portfolio. Given that this is purely a dividend analysis, you should always research extensively before deciding whether or not a stock is an appropriate investment for you. I always recommend analysing the company’s fundamentals and underlying business before making an investment decision. I’ve put together three relevant aspects you should further examine:
Future Outlook: What are well-informed industry analysts predicting for NTPC’s future growth? Take a look at our free research report of analyst consensus for NTPC’s outlook.
Valuation: What is NTPC 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 NTPC 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.
