There is a lot to be liked about United Technologies Corporation (NYSE:UTX) as an income stock, over the past 10 years it has returned an average of 2.00% per year. The company currently pays out a dividend yield of 2.25% to shareholders, making it a relatively attractive dividend stock. Does United Technologies tick all the boxes of a great dividend stock? Below, I’ll take you through my analysis. View out our latest analysis for United Technologies
Here’s how I find good dividend stocks
Whenever I am looking at a potential dividend stock investment, I always check these five metrics:
- Is it the top 25% annual dividend yield payer?
- Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?
- Has dividend per share amount increased over the past?
- Is its earnings sufficient to payout dividend at the current rate?
- Will it be able to continue to payout at the current rate in the future?
Does United Technologies pass our checks?
The current trailing twelve-month payout ratio for the stock is 48.80%, which means that the dividend is covered by earnings. In the near future, analysts are predicting lower payout ratio of 40.40%, leading to a dividend yield of 2.48%. However, EPS should increase to $7.15, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment.
If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. In the case of UTX it has increased its DPS from $1.28 to $2.8 in the past 10 years. During this period it has not missed a payment, as one would expect for a company increasing its dividend. This is an impressive feat, which makes UTX a true dividend rockstar.Relative to peers, United Technologies has a yield of 2.25%, which is high for Aerospace & Defense stocks but still below the market’s top dividend payers.
Considering the dividend attributes we analyzed above, United Technologies is definitely worth keeping an eye on for someone looking to build a dedicated income portfolio. 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. There are three fundamental factors you should further examine:
- Future Outlook: What are well-informed industry analysts predicting for UTX’s future growth? Take a look at our free research report of analyst consensus for UTX’s outlook.
- Valuation: What is UTX 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 UTX is currently mispriced by the market.
- Other Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.