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Spire Inc. (NYSE:SR) Is An Attractive Dividend Stock, Here’s Why

Spire Inc. (NYSE:SR) has pleased shareholders over the past 10 years, by paying out dividends. The stock currently pays out a dividend yield of 3.3%, and has a market cap of US$3.8b. Should it have a place in your portfolio? Let’s take a look at Spire in more detail.

Check out our latest analysis for Spire

How I analyze 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-paying companies?

  • Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?

  • Has dividend per share risen in the past couple of years?

  • Is its earnings sufficient to payout dividend at the current rate?

  • Will it be able to continue to payout at the current rate in the future?

NYSE:SR Historical Dividend Yield December 26th 18
NYSE:SR Historical Dividend Yield December 26th 18

Does Spire pass our checks?

The company currently pays out 52% 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 a higher payout ratio of 64% which, assuming the share price stays the same, leads to a dividend yield of around 3.5%. However, EPS is forecasted to fall to $3.74 in the upcoming year. Therefore, although payout is expected to increase, the fall in earnings may not equate to higher dividend income.

When assessing the forecast sustainability of a dividend it is also worth considering the cash flow of the business. A business with strong cash flow can sustain a higher divided payout ratio than a company with weak cash flow.

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. SR has increased its DPS from $1.54 to $2.37 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. This is an impressive feat, which makes SR a true dividend rockstar.

In terms of its peers, Spire produces a yield of 3.3%, which is high for Gas Utilities stocks but still below the market’s top dividend payers.

Next Steps:

With these dividend metrics in mind, I definitely rank Spire as a strong income stock, and is worth further research for anyone who considers dividends an important part of their portfolio strategy. 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 factors you should further examine:

  1. Future Outlook: What are well-informed industry analysts predicting for SR’s future growth? Take a look at our free research report of analyst consensus for SR’s outlook.

  2. Historical Performance: What has SR’s returns been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.

  3. 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.

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