Oil and Natural Gas Corporation Limited (NSE:ONGC): Ex-Dividend Is Coming In 8 Days, Should You Buy?

If you are interested in cashing in on Oil and Natural Gas Corporation Limited's (NSEI:ONGC) upcoming dividend of ₹2.25 per share, you only have 8 days left to buy the shares before its ex-dividend date, 13 March 2018, in time for dividends payable on the 29 March 2018. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I examine Oil and Natural Gas's latest financial data to analyse its dividend characteristics. View our latest analysis for Oil and Natural Gas

5 questions to ask before buying a dividend stock

When assessing a stock as a potential addition to my dividend Portfolio, I look at these five areas:

• Does it pay an annual yield higher than 75% of dividend payers?
• Has it paid dividend every year without dramatically reducing payout in the past?
• Has the amount of dividend per share grown over the past?
• Can it afford to pay the current rate of dividends from its earnings?
• Based on future earnings growth, will it be able to continue to payout dividend at the current rate?

How well does Oil and Natural Gas fit our criteria?

The company currently pays out 37.88% of its earnings as a dividend, according to its trailing twelve-month data, meaning the dividend is sufficiently covered by earnings. Going forward, analysts expect ONGC's payout to remain around the same level at 35.87% of its earnings, which leads to a dividend yield of around 4.22%. In addition to this, EPS should increase to ₹19.19. If there's one type of stock you want to be reliable, it's dividend stocks and their stable income-generating ability. Although ONGC's per share payments have increased in the past 10 years, it has not been a completely smooth ride. Investors have seen reductions in the dividend per share in the past, although, it has picked up again. In terms of its peers, Oil and Natural Gas generates a yield of 3.19%, which is high for Oil and Gas stocks.

Next Steps:

Taking into account the dividend metrics, Oil and Natural Gas ticks most of the boxes as a strong dividend investment, putting it in my list of top dividend payers. 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. I've put together three pertinent aspects you should further examine:

1. Future Outlook: What are well-informed industry analysts predicting for ONGC’s future growth? Take a look at our free research report of analyst consensus for ONGC’s outlook.
2. Valuation: What is ONGC 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 ONGC is currently mispriced by the market.
3. Other 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 analyst Simply Wall St and Simply Wall St have no position in any of the companies mentioned. This article is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.