Is Woodside Petroleum Ltd (ASX:WPL) A Great Dividend Stock?
Dividends play a key role in compounding returns over time and can form a large part of our portfolio return. Over the past 10 years, Woodside Petroleum Ltd (ASX:WPL) has returned an average of 4.00% per year to shareholders in terms of dividend yield. Does Woodside Petroleum tick all the boxes of a great dividend stock? Below, I’ll take you through my analysis. Check out our latest analysis for Woodside Petroleum
5 checks you should use to assess 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 its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?
Has dividend per share amount increased over the past?
Is is able to pay the current rate of dividends from its earnings?
Will it have the ability to keep paying its dividends going forward?
How does Woodside Petroleum fare?
The current trailing twelve-month payout ratio for the stock is 80.48%, meaning the dividend is sufficiently covered by earnings. Going forward, analysts expect WPL’s payout to remain around the same level at 79.49% of its earnings, which leads to a dividend yield of 5.42%. In addition to this, EPS should increase to $1.57.
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. Whilst its per-share payments have increased during the past 10 years, there has been some hiccups. Investors have seen reductions in the dividend per share in the past, although, it has picked up again.
Relative to peers, Woodside Petroleum has a yield of 3.55%, which is high for Oil and Gas stocks but still below the market’s top dividend payers.
Next Steps:
With these dividend metrics in mind, I definitely rank Woodside Petroleum 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, 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. There are three relevant factors you should further examine:
Future Outlook: What are well-informed industry analysts predicting for WPL’s future growth? Take a look at our free research report of analyst consensus for WPL’s outlook.
Valuation: What is WPL 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 WPL 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.
