Yahoo Finance Is Buying Qantas Airways Limited (ASX:QAN) For Its Upcoming AU$0.10 Dividend A Good Choice?
Important news for shareholders and potential investors in Qantas Airways Limited (ASX:QAN): The dividend payment of AU$0.10 per share will be distributed into shareholder on 10 October 2018, and the stock will begin trading ex-dividend at an earlier date, 05 September 2018. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I examine Qantas Airways’s latest financial data to analyse its dividend characteristics.
See our latest analysis for Qantas Airways
5 checks you should do on a dividend stock
Whenever I am looking at a potential dividend stock investment, I always check these five metrics:
Is it the top 25% annual dividend yield payer?
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?
Is is able 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?
Does Qantas Airways pass our checks?
The current trailing twelve-month payout ratio for the stock is 30.5%, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting a higher payout ratio of 37.5%, leading to a dividend yield of around 3.8%. Moreover, EPS should increase to A$0.61. The higher payout forecasted, along with higher earnings, should lead to greater dividend income for investors moving forward.
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. Dividend payments from Qantas Airways have been volatile in the past 10 years, with some years experiencing significant drops of over 25%. These characteristics do not bode well for income investors seeking reliable stream of dividends.
Relative to peers, Qantas Airways has a yield of 3.1%, which is high for Airlines stocks but still below the market’s top dividend payers.
Next Steps:
If Qantas Airways is in your portfolio for cash-generating reasons, there may be better alternatives out there. 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. Below, I’ve compiled three relevant factors you should further research:
Future Outlook: What are well-informed industry analysts predicting for QAN’s future growth? Take a look at our free research report of analyst consensus for QAN’s outlook.
Valuation: What is QAN 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 QAN is currently mispriced by the market.
Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
