Dividends play a key role in compounding returns over time and can form a large part of our portfolio return. In the past 7 years Apollo Global Management LLC (NYSE:APO) has returned an average of 9.00% per year to investors in the form of dividend payouts. Does Apollo Global Management tick all the boxes of a great dividend stock? Below, I’ll take you through my analysis. View out our latest analysis for Apollo Global Management
Here’s how I find good dividend stocks
When assessing a stock as a potential addition to my dividend Portfolio, I look at these five areas:
- Is it the top 25% annual dividend yield payer?
- Does it consistently pay out dividends without missing a payment of significantly cutting payout?
- Has dividend per share amount increased over the past?
- Is its earnings sufficient to payout dividend at the current rate?
- Based on future earnings growth, will it be able to continue to payout dividend at the current rate?
How does Apollo Global Management fare?The company currently pays out 97.75% of its earnings as a dividend, according to its trailing twelve-month data, meaning the dividend is not sufficiently covered by its earnings. However, going forward, analysts expect APO’s payout to fall into a more sustainable range of 86.57% of its earnings, which leads to a dividend yield of around 8.18%. Reliablity is an important factor for dividend stocks, particularly for income investors who want a strong track record of payment and a positive outlook for future payout. The reality is that it is too early to consider Apollo Global Management as a dividend investment. It has only been consistently paying dividends for 7 years, however, standard practice for reliable payers is to look for a 10-year minimum track record. Compared to its peers, Apollo Global Management has a yield of 6.42%, which is high for Capital Markets stocks.
Whilst there are few things you may like about Apollo Global Management from a dividend stock perspective, the truth is that overall it probably is not the best choice for a dividend investor. However, if you are not strictly just a dividend investor, the stock could still offer some interesting investment opportunities. 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 key factors you should further examine:
- Valuation: What is APO 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 APO is currently mispriced by the market.
- Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Apollo Global Management’s board and the CEO’s back ground.
- Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.