Investors who want to cash in on MPLX LP’s (NYSE:MPLX) upcoming dividend of $0.61 per share have only 3 days left to buy the shares before its ex-dividend date, 02 February 2018, in time for dividends payable on the 14 February 2018. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I take a deeper dive into MPLX’s latest financial data to analyse its dividend attributes. See our latest analysis for MPLX
How I analyze a dividend stock
When researching a dividend stock, I always follow the following screening criteria:
- Is it the top 25% annual dividend yield payer?
- Has it paid dividend every year without dramatically reducing payout in the past?
- Has it increased its dividend per share amount over the past?
- Can it afford to pay the current rate of dividends from its earnings?
- Will it have the ability to keep paying its dividends going forward?
How well does MPLX fit our criteria?MPLX has a trailing twelve-month payout ratio of more than 200% of earnings, which suggests that the dividend is not well-covered by earnings by any means. In the near future, analysts are predicting a more sensible payout ratio of 163.11%, leading to a dividend yield of 6.99%. Furthermore, EPS should increase to $1.52, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment. If dividend is a key criteria in your investment consideration, then you need to make sure the dividend stock you’re eyeing out is reliable in its payments. Unfortunately, it is really too early to view MPLX 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, MPLX produces a yield of 6.28%, which is high for Oil and Gas stocks.
After digging a little deeper into MPLX’s yield, it’s easy to see why you should be cautious investing in the company just for the dividend. 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. I’ve put together three important aspects you should further examine:
- 1. Future Outlook: What are well-informed industry analysts predicting for MPLX’s future growth? Take a look at our free research report of analyst consensus for MPLX’s outlook.
- 2. Valuation: What is MPLX 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 MPLX 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.