On the 14 December 2017, Hugoton Royalty Trust (NYSE:HGT) will be paying shareholders an upcoming dividend amount of $0.01 per share. However, investors must have bought the company’s stock before 29 November 2017 in order to qualify for the payment. That means you have only 4 days left! What does this mean for current shareholders and potential investors? Below, I will explain how holding HGT can impact your portfolio income stream, by analysing the stock’s most recent financial data and dividend attributes. Check out our latest analysis for Hugoton Royalty Trust
How I analyze a dividend stock
If you are a dividend investor, you should always assess these five key metrics:
- Is it paying an annual yield above 75% of dividend payers?
- Does it consistently pay out dividends without missing a payment of significantly cutting payout?
- Has it increased its dividend per share amount over the past?
- Can it afford to pay the current rate of dividends from its earnings?
- Will it be able to continue to payout at the current rate in the future?
Does Hugoton Royalty Trust pass our checks?
Hugoton Royalty Trust has a payout ratio of 100.00%, which means that the dividend is not well-covered by its earnings. Furthermore, analysts have not forecasted a dividends per share for the future, which makes it hard to determine the yield shareholders should expect, and whether the current payout is sustainable, moving forward. If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. Not only have dividend payouts from Hugoton Royalty Trust fallen over the past 10 years, it has also been highly volatile during this time, with drops of over 25% in some years. These characteristics do not bode well for income investors seeking reliable stream of dividends. In terms of its peers, HGT generates a yield of 5.05%, which is high for oil, gas and consumable fuels stocks.
What this means for you:
Are you a shareholder? You may be wondering why Hugoton Royalty Trust is paying out dividends at all, instead of re-investing into the business to generate higher cash flows in the future. It may be valuable exploring other dividend stocks as alternatives to HGT or even look at high-growth stocks to complement your steady income stocks. I encourage you to continue your research by exploring my interactive free list of dividend rockstars as well as high-growth stocks to potentially add to your holdings.
Are you a potential investor? Now you know to keep in mind the reason why investors should be careful investing in HGT for the dividend. But if you are not exclusively a dividend investor, HGT could still be an interesting investment opportunity. As with all investments, 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. Take a look at our latest free fundmental analysis to explore other aspects of HGT.
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.