Have you been keeping an eye on MLP SE's (DB:MLP) upcoming dividend of €0.20 per share payable on the 19 June 2018? Then you only have 6 days left before the stock starts trading ex-dividend on the 15 June 2018. What does this mean for current shareholders and potential investors? Below, I will explain how holding MLP can impact your portfolio income stream, by analysing the stock's most recent financial data and dividend attributes. Check out our latest analysis for MLP
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 its annual yield among the top 25% of dividend-paying companies?
- Has it paid dividend every year without dramatically reducing payout in the past?
- Has dividend per share risen in the past couple of years?
- 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 does MLP fare?The current trailing twelve-month payout ratio for the stock is 77.00%, which means that the dividend is covered by earnings. However, going forward, analysts expect MLP's payout to fall to 65.61% of its earnings, which leads to a dividend yield of 4.03%. However, EPS should increase to €0.33, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment. If there is one thing that you want to be reliable in your life, it's dividend stocks and their constant income stream. Not only have dividend payouts from MLP fallen over the past 10 years, it has also been highly volatile during this time, with drops of over 25% in some years. This means that dividend hunters should probably steer clear of the stock, at least for now until the track record improves. In terms of its peers, MLP generates a yield of 3.50%, which is high for Capital Markets stocks but still below the market's top dividend payers.
Taking all the above into account, MLP is a complicated pick for dividend investors given that there are a couple of positive things about it as well as negative. But if you are not exclusively a dividend investor, the stock could still be an interesting investment opportunity. 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. I've put together three key factors you should look at:
- Future Outlook: What are well-informed industry analysts predicting for MLP’s future growth? Take a look at our free research report of analyst consensus for MLP’s outlook.
- Valuation: What is MLP 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 MLP 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.
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Simply Wall St has no position in any of the companies mentioned. This article 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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
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