There is a lot to be liked about Acciona, S.A. (BME:ANA) as an income stock. It has paid dividends over the past 10 years. The company currently pays out a dividend yield of 3.4% to shareholders, making it a relatively attractive dividend stock. Should it have a place in your portfolio? Let’s take a look at Acciona in more detail.
5 questions I ask before picking a dividend stock
If you are a dividend investor, you should always assess these five key metrics:
- Does it pay an annual yield higher than 75% of dividend payers?
- 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?
- Can it afford 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 well does Acciona fit our criteria?
The current trailing twelve-month payout ratio for the stock is 57%, which means that the dividend is covered by earnings. Going forward, analysts expect ANA’s payout to increase to 75% of its earnings. Assuming a constant share price, this equates to a dividend yield of 3.6%. However, EPS is forecasted to fall to €4.63 in the upcoming year. Therefore, although payout is expected to increase, the fall in earnings may not equate to higher dividend income.
If you want to dive deeper into the sustainability of a certain payout ratio, you may wish to consider 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 there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. ANA has increased its DPS from €2.92 to €3.35 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, Acciona generates a yield of 3.4%, which is on the low-side for Electric Utilities stocks.
With this in mind, I definitely rank Acciona 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. There are three fundamental aspects you should further research:
- Future Outlook: What are well-informed industry analysts predicting for ANA’s future growth? Take a look at our free research report of analyst consensus for ANA’s outlook.
- Valuation: What is ANA 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 ANA 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.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.