A large part of investment returns can be generated by dividend-paying stock given their role in compounding returns over time. Over the past 2 years, EQT Holdings Limited (ASX:EQT) has returned an average of 4.00% per year to shareholders in terms of dividend yield. Does EQT Holdings tick all the boxes of a great dividend stock? Below, I’ll take you through my analysis. View our latest analysis for EQT Holdings
Here’s how I find good dividend stocks
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?
- Does it consistently pay out dividends without missing a payment of significantly cutting payout?
- Has it increased its dividend per share amount over the past?
- Is its earnings sufficient to payout dividend at the current rate?
- Will the company be able to keep paying dividend based on the future earnings growth?
Does EQT Holdings pass our checks?EQT Holdings has a trailing twelve-month payout ratio of 85.89%, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting lower payout ratio of 75.46%, leading to a dividend yield of 4.49%. However, EPS should increase to A$1.08, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment. If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. The reality is that it is too early to consider EQT Holdings as a dividend investment. It has only been consistently paying dividends for 2 years, however, standard practice for reliable payers is to look for a 10-year minimum track record. Compared to its peers, EQT Holdings produces a yield of 3.81%, which is on the low-side for Capital Markets stocks.
Whilst there are few things you may like about EQT Holdings from a dividend stock perspective, the truth is that overall it probably is not the best choice for a dividend investor. However, if you are not strictly just a dividend investor, the stock could still offer some interesting investment opportunities. 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. Below, I’ve compiled three important aspects you should further research:
- Future Outlook: What are well-informed industry analysts predicting for EQT’s future growth? Take a look at our free research report of analyst consensus for EQT’s outlook.
- Valuation: What is EQT 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 EQT is currently mispriced by the market.
- Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.