If you are interested in cashing in on Avista Corporation’s (NYSE:AVA) upcoming dividend of $0.37 per share, you only have 3 days left to buy the shares before its ex-dividend date, 22 February 2018, in time for dividends payable on the 15 March 2018. Is this future income stream a compelling catalyst for dividend investors to think about the stock as an investment today? Let’s take a look at Avista’s most recent financial data to examine its dividend characteristics in more detail. See our latest analysis for Avista
How I analyze a dividend stock
When assessing a stock as a potential addition to my dividend Portfolio, I look at these five areas:
- Does it pay an annual yield higher than 75% of dividend payers?
- 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?
- Does earnings amply cover its dividend payments?
- Will the company be able to keep paying dividend based on the future earnings growth?
How does Avista fare?
Avista has a trailing twelve-month payout ratio of 70.89%, meaning the dividend is sufficiently covered by earnings. Going forward, analysts expect AVA’s payout to remain around the same level at 64.87% of its earnings, which leads to a dividend yield of around 3.03%. Moreover, EPS should increase to $2.02. If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. AVA has increased its DPS from $0.6 to $1.49 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. This is an impressive feat, which makes AVA a true dividend rockstar. Compared to its peers, Avista generates a yield of 2.97%, which is on the low-side for Integrated Utilities stocks.
Next Steps:
With this in mind, I definitely rank Avista as a strong dividend stock, and makes it worth further research for anyone who likes steady income generation from their portfolio. 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 relevant factors you should further examine:
- 1. Historical Performance: What has AVA’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.
- 2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Avista’s board and the CEO’s back ground.
- 3. Other Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.