Read This Before Buying Aggreko Plc (LON:AGK) For Its Upcoming UK£0.094 Dividend
Important news for shareholders and potential investors in Aggreko Plc (LON:AGK): The dividend payment of UK£0.094 per share will be distributed into shareholder on 02 October 2018, and the stock will begin trading ex-dividend at an earlier date, 06 September 2018. What does this mean for current shareholders and potential investors? Below, I will explain how holding Aggreko can impact your portfolio income stream, by analysing the stock’s most recent financial data and dividend attributes.
See our latest analysis for Aggreko
5 questions I ask before picking a dividend stock
Whenever I am looking at a potential dividend stock investment, I always check these five metrics:
Is it the top 25% annual dividend yield payer?
Has it paid dividend every year without dramatically reducing payout in the past?
Has dividend per share amount increased over the past?
Is is able 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?
How does Aggreko fare?
The current trailing twelve-month payout ratio for the stock is 63.6%, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting lower payout ratio of 50.6%, leading to a dividend yield of 3.3%. However, EPS should increase to £0.49, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment.
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. AGK has increased its DPS from £0.096 to £0.27 in the past 10 years. It has also been paying out dividend consistently during this time, as you’d expect for a company increasing its dividend levels. These are all positive signs of a great, reliable dividend stock.
Compared to its peers, Aggreko generates a yield of 3.2%, which is high for Commercial Services stocks but still below the market’s top dividend payers.
Next Steps:
Taking into account the dividend metrics, Aggreko ticks most of the boxes as a strong dividend investment, putting it in my list of top dividend payers. 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. Below, I’ve compiled three pertinent factors you should look at:
Future Outlook: What are well-informed industry analysts predicting for AGK’s future growth? Take a look at our free research report of analyst consensus for AGK’s outlook.
Valuation: What is AGK 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 AGK 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 past 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. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
