Is Keppel Corporation Limited (SGX:BN4) An Attractive Dividend Stock?

A sizeable part of portfolio returns can be produced by dividend stocks due to their contribution to compounding returns in the long run. Over the past 10 years, Keppel Corporation Limited (SGX:BN4) has returned an average of 4.00% per year to shareholders in terms of dividend yield. Let's dig deeper into whether Keppel should have a place in your portfolio. Check out our latest analysis for Keppel

Here's how I find good dividend stocks

Whenever I am looking at a potential dividend stock investment, I always check these five metrics:

• 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 dividend per share risen in the past couple of years?
• 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?

Does Keppel pass our checks?

Keppel has a trailing twelve-month payout ratio of 184.49%, which means that the dividend is not well-covered by its earnings. In the near future, analysts are predicting a more sensible payout ratio of 43.41%, leading to a dividend yield of 3.36%. In addition to this, EPS should increase to SGD0.55, 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. Whilst its per-share payments have increased during the past 10 years, there has been some hiccups. Shareholders would have seen a few years of reduced payments in this time. In terms of its peers, Keppel generates a yield of 2.76%, which is high for Industrials stocks but still below the market's top dividend payers.

Next Steps:

Taking all the above into account, Keppel 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, 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 relevant factors you should further research:

• 1. Future Outlook: What are well-informed industry analysts predicting for BN4’s future growth? Take a look at our free research report of analyst consensus for BN4’s outlook.
• 2. Valuation: What is BN4 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 BN4 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com

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.