Dividends play an important role in compounding returns in the long run and end up forming a sizeable part of investment returns. Awilco Drilling PLC (OB:AWDR) has returned to shareholders over the past 5 years, an average dividend yield of 25.00% annually. Let’s dig deeper into whether Awilco Drilling should have a place in your portfolio. See our latest analysis for Awilco Drilling
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:
- 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?
- 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?
Does Awilco Drilling pass our checks?
Awilco Drilling has a trailing twelve-month payout ratio of 76.95%, which means that the dividend is covered by earnings. Furthermore, analysts have not forecasted a dividends per share for the future, which makes it hard to determine the yield shareholders should expect, and whether the current payout is sustainable, moving forward.
If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. The reality is that it is too early to consider Awilco Drilling as a dividend investment. It has only been consistently paying dividends for 5 years, however, standard practice for reliable payers is to look for a 10-year minimum track record.In terms of its peers, Awilco Drilling produces a yield of 13.77%, which is high for Energy Services stocks.
If you are building an income portfolio, then Awilco Drilling is a complicated choice since it has some positive aspects as well as negative ones. 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, 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 pertinent aspects you should further research:
- Future Outlook: What are well-informed industry analysts predicting for AWDR’s future growth? Take a look at our free research report of analyst consensus for AWDR’s outlook.
- Historical Performance: What has AWDR’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.
- Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.