Is QinetiQ Group plc (LON:QQ.) A Smart Choice For Dividend Investors?
Dividends play an important role in compounding returns in the long run and end up forming a sizeable part of investment returns. Over the past 10 years, QinetiQ Group plc (LSE:QQ.) has returned an average of 2.00% per year to shareholders in terms of dividend yield. Does QinetiQ Group tick all the boxes of a great dividend stock? Below, I’ll take you through my analysis. See our latest analysis for QinetiQ Group
5 checks you should do on a dividend stock
If you are a dividend investor, you should always assess these five key metrics:
Is its annual yield among the top 25% of dividend-paying companies?
Has it paid dividend every year without dramatically reducing payout in the past?
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?
Does QinetiQ Group pass our checks?
The current trailing twelve-month payout ratio for the stock is 25.08%, meaning the dividend is sufficiently covered by earnings. Going forward, analysts expect QQ.’s payout to increase to 42.30% of its earnings, which leads to a dividend yield of 3.03%. However, EPS is forecasted to fall to £0.17 in the upcoming year. Therefore, although payout is expected to increase, the fall in earnings may not equate to higher dividend income. If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. Although QQ.’s per share payments have increased in the past 10 years, it has not been a completely smooth ride. Investors have seen reductions in the dividend per share in the past, although, it has picked up again. In terms of its peers, QinetiQ Group has a yield of 2.70%, which is high for Aerospace & Defense stocks but still below the market’s top dividend payers.
Next Steps:
With this in mind, I definitely rank QinetiQ Group as a strong dividend stock, and makes it worth further research for anyone who likes steady income generation from their 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. Below, I’ve compiled three fundamental aspects you should look at:
Future Outlook: What are well-informed industry analysts predicting for QQ.’s future growth? Take a look at our free research report of analyst consensus for QQ.’s outlook.
Valuation: What is QQ. 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 QQ. 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.
