Attention dividend hunters! PNM Resources Inc (NYSE:PNM) will be distributing its dividend of $0.27 per share on the 01 February 2018, and will start trading ex-dividend in 3 days time on the 17 January 2018. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I take a deeper dive into PNM Resources’s latest financial data to analyse its dividend attributes. Check out our latest analysis for PNM Resources
5 questions to ask before buying a dividend stock
When researching a dividend stock, I always follow the following screening criteria:
- Is their annual yield among the top 25% of dividend payers?
- Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?
- Has dividend per share risen in the past couple of years?
- Can it afford to pay the current rate of dividends from its earnings?
- Will it be able to continue to payout at the current rate in the future?
How does PNM Resources fare?
The company currently pays out 48.72% of its earnings as a dividend, meaning the dividend is sufficiently covered by earnings. Going forward, analysts expect PNM’s payout to increase to 54.41% of its earnings, which leads to a dividend yield of around 3.15%. However, EPS is forecasted to fall to $1.75 in the upcoming year. Therefore, although payout is expected to increase, the fall in earnings may not equate to higher dividend income. If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. Whilst its per-share payments have increased during the past 10 years, there has been some hiccups. Investors have seen reductions in the dividend per share in the past, although, it has picked up again. Relative to peers, PNM Resources generates a yield of 2.97%, which is on the low-side for electric utilities stocks.What this means for you:
Are you a shareholder? Investors of PNM Resources can continue to expect strong dividends from the stock moving forward. With its favorable dividend characteristics, PNM Resources is one worth keeping around in your income portfolio. But, depending on your current holdings, it may be worth exploring other income stocks to increase diversification, or even look at high-growth stocks to complement your steady income stocks. I encourage you to continue your research by checking out my interactive free list of dividend rockstars as well as high-growth stocks to potentially add to your holdings.
Are you a potential investor? Taking into account the dividend metrics, PNM Resources ticks most of the boxes as a strong dividend investment, putting it in my list of top dividend payers. As with all investments, 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. No matter how much of a cash cow PNM Resources is, it is not worth an infinite price. Is PNM Resources overvalued or is it actually a bargain? Take a look at our latest free analysis to find out!