There is a lot to be liked about Praxair Inc (NYSE:PX) as an income stock, over the past 10 years it has returned an average of 2.00% per year. The company is currently worth US$44.31b, and now yields roughly 2.12%. Does Praxair tick all the boxes of a great dividend stock? Below, I’ll take you through my analysis. Check out our latest analysis for Praxair
5 questions I ask before picking a dividend stock
Whenever I am looking at a potential dividend stock investment, I always check these five metrics:
- Is it paying an annual yield above 75% 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?
- 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 Praxair fit our criteria?
The company currently pays out 69.25% of its earnings as a dividend, according to its trailing twelve-month data, meaning the dividend is sufficiently covered by earnings. However, going forward, analysts expect PX’s payout to fall to 51.65% of its earnings, which leads to a dividend yield of 2.25%. However, EPS should increase to $6.88, 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. In the case of PX it has increased its DPS from $1.5 to $3.3 in the past 10 years. It has also been paying out dividend consistently during this time, as you’d expect for a company increasing its dividend levels. These are all positive signs of a great, reliable dividend stock.In terms of its peers, Praxair produces a yield of 2.12%, which is on the low-side for Chemicals stocks.
Considering the dividend attributes we analyzed above, Praxair is definitely worth keeping an eye on for someone looking to build a dedicated income portfolio. Given that this is purely a dividend analysis, I recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. There are three fundamental aspects you should look at:
- Future Outlook: What are well-informed industry analysts predicting for PX’s future growth? Take a look at our free research report of analyst consensus for PX’s outlook.
- Historical Performance: What has PX’s returns been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
- Other Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.