A sizeable part of portfolio returns can be produced by dividend stocks due to their contribution to compounding returns in the long run. Over the past 6 years, GasLog Ltd (NYSE:GLOG) has returned an average of 3.00% per year to shareholders in terms of dividend yield. Does GasLog tick all the boxes of a great dividend stock? Below, I’ll take you through my analysis. View our latest analysis for GasLog
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 consistently paid a stable dividend without missing a payment or drastically cutting payout?
- Has the amount of dividend per share grown 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 GasLog fare?
GasLog has a trailing twelve-month payout ratio of 162.17%, meaning the dividend is not sufficiently covered by its earnings. However, going forward, analysts expect GLOG’s payout to fall into a more sustainable range of 35.86% of its earnings, which leads to a dividend yield of around 2.97%. In addition to this, EPS should increase to $0.65, 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. Unfortunately, it is really too early to view GasLog as a dividend investment. It has only been consistently paying dividends for 6 years, however, standard practice for reliable payers is to look for a 10-year minimum track record. In terms of its peers, GasLog produces a yield of 2.81%, which is on the low-side for Oil and Gas stocks.
Now you know to keep in mind the reason why investors should be careful investing in GasLog for the dividend. On the other hand, if you are not strictly just a dividend investor, the stock could still be offering some interesting investment opportunities. Given that this is purely a dividend analysis, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. I’ve put together three pertinent factors you should further research:
- 1. Future Outlook: What are well-informed industry analysts predicting for GLOG’s future growth? Take a look at our free research report of analyst consensus for GLOG’s outlook.
- 2. Valuation: What is GLOG 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 GLOG is currently mispriced by the market.
- 3. 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.