Dividends play an important role in compounding returns in the long run and end up forming a sizeable part of investment returns. Recently, APQ Global Limited (AIM:APQ) has returned an average of 5.00% per year to shareholders in terms of dividend yield. Does APQ Global tick all the boxes of a great dividend stock? Below, I’ll take you through my analysis. See our latest analysis for APQ Global
How I analyze a dividend stock
When researching a dividend stock, I always follow the following screening criteria:
- 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 dividend per share amount increased over the past?
- Does earnings amply cover its dividend payments?
- Based on future earnings growth, will it be able to continue to payout dividend at the current rate?
How well does APQ Global fit our criteria?
APQ Global has a trailing twelve-month payout ratio of 70.58%, meaning the dividend is sufficiently covered by earnings. Going forward, analysts expect APQ’s payout to increase to 86.96% of its earnings, which leads to a dividend yield of 6.32%. Moreover, EPS should increase to £0.07. The higher payout forecasted, along with higher earnings, should lead to greater dividend income for investors moving forward. 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 APQ Global as a dividend investment. It has only been paying out dividend for the past one year. Generally, the rule of thumb for determining whether a stock is a reliable dividend payer is that it should be consistently paying dividends for the past 10 years or more. Clearly there’s a long road ahead before we can ascertain whether APQ one as a stable dividend player. In terms of its peers, APQ Global produces a yield of 6.32%, which is high for Capital Markets stocks.Next Steps:
With this in mind, I definitely rank APQ Global 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 urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. Below, I’ve compiled three important aspects you should further examine:
- Historical Performance: What has APQ’s returns been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
- Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on APQ Global’s board and the CEO’s back ground.
- Other Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.