Should EQT Holdings Limited (ASX:EQT) Be Part Of Your Portfolio?

Dividends play a key role in compounding returns over time and can form a large part of our portfolio return. EQT Holdings Limited (ASX:EQT) has returned to shareholders over the past 3 years, an average dividend yield of 4.00% annually. Should it have a place in your portfolio? Let’s take a look at EQT Holdings in more detail. View out our latest analysis for EQT Holdings

5 checks you should do on a dividend stock

When researching a dividend stock, I always follow the following screening criteria:

• Is it paying an annual yield above 75% of dividend payers?

• Has it consistently paid a stable dividend without missing a payment or drastically cutting payout?

• Has the amount of dividend per share grown over the past?

• Is is able to pay the current rate of dividends from its earnings?

• Will it have the ability to keep paying its dividends going forward?

ASX:EQT Historical Dividend Yield June 24th 18

How well does EQT Holdings fit our criteria?

The company currently pays out 85.89% 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 EQT’s payout to fall to 75.46% of its earnings, which leads to a dividend yield of around 4.62%. However, EPS should increase to A$1.08, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment.

If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. Unfortunately, it is really too early to view EQT Holdings as a dividend investment. It has only been consistently paying dividends for 3 years, however, standard practice for reliable payers is to look for a 10-year minimum track record.

In terms of its peers, EQT Holdings has a yield of 3.92%, which is on the low-side for Capital Markets stocks.

Next Steps:

If EQT Holdings is in your portfolio for cash-generating reasons, there may be better alternatives out there. However, if you are not strictly just a dividend investor, the stock could still offer some interesting investment opportunities. 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. There are three relevant factors you should further research:

1. Future Outlook: What are well-informed industry analysts predicting for EQT’s future growth? Take a look at our free research report of analyst consensus for EQT’s outlook.

2. Historical Performance: What has EQT’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.

3. 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 pass 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.