Trustpower Limited (NZE:TPW): Ex-Dividend Is In 9 Days, Should You Buy?

Important news for shareholders and potential investors in Trustpower Limited (NZSE:TPW): The dividend payment of NZ$0.2 per share will be distributed into shareholder on 15 June 2018, and the stock will begin trading ex-dividend at an earlier date, 31 May 2018. Should you diversify into Trustpower and boost your portfolio income stream? Well, keep on reading because today, I'm going to look at the latest data and analyze the stock and its dividend property in further detail. See our latest analysis for Trustpower

5 checks you should use to assess a dividend stock

When researching a dividend stock, I always follow the following screening criteria:

• Is their annual yield among the top 25% of dividend payers?
• Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?
• Has the amount of dividend per share grown over the past?
• Is is able to pay the current rate of dividends from its earnings?
• Will the company be able to keep paying dividend based on the future earnings growth?

How well does Trustpower fit our criteria?

The company currently pays out 94.37% of its earnings as a dividend, according to its trailing twelve-month data, which means that the dividend is not well-covered by its earnings. In the near future, analysts are predicting a payout ratio of 98.44%, leading to a dividend yield of around 5.93%. In addition to this, EPS is forecasted to fall to NZ$0.34 in the upcoming year. 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 Trustpower 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. In terms of its peers, Trustpower generates a yield of 5.71%, which is on the low-side for Electric Utilities stocks.

Next Steps:

Now you know to keep in mind the reason why investors should be careful investing in Trustpower for the dividend. On the other hand, if you are not strictly just a dividend investor, the stock could still be offering some interesting investment opportunities. 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. Below, I've compiled three important factors you should further research:

1. Future Outlook: What are well-informed industry analysts predicting for TPW’s future growth? Take a look at our free research report of analyst consensus for TPW’s outlook.
2. Valuation: What is TPW 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 TPW is currently mispriced by the market.
3. 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.