Yahoo Finance Only 4 Days Left To Cash In On Origin Energy Limited (ASX:ORG) Dividend
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Have you been keeping an eye on Origin Energy Limited’s (ASX:ORG) upcoming dividend of AU$0.10 per share payable on the 29 March 2019? Then you only have 4 days left before the stock starts trading ex-dividend on the 01 March 2019. What does this mean for current shareholders and potential investors? Below, I will explain how holding Origin Energy can impact your portfolio income stream, by analysing the stock’s most recent financial data and dividend attributes.
See our latest analysis for Origin Energy
How I analyze a dividend stock
When assessing a stock as a potential addition to my dividend Portfolio, I look at these five areas:
Is it the top 25% annual dividend yield payer?
Does it consistently pay out dividends without missing a payment of significantly cutting payout?
Has dividend per share risen in the past couple of years?
Is its earnings sufficient to payout dividend at the current rate?
Will the company be able to keep paying dividend based on the future earnings growth?
Does Origin Energy pass our checks?
The company currently pays out 15% of its earnings as a dividend, according to its trailing twelve-month data, which means that the dividend is covered by earnings. Going forward, analysts expect ORG’s payout to increase to 76% of its earnings. Assuming a constant share price, this equates to a dividend yield of 4.3%. However, EPS is forecasted to fall to A$0.64 in the upcoming year. Therefore, although payout is expected to increase, the fall in earnings may not equate to higher dividend income.
If you want to dive deeper into the sustainability of a certain payout ratio, you may wish to consider the cash flow of the business. Cash flow is important because companies with strong cash flow can usually sustain higher payout ratios.
Reliablity is an important factor for dividend stocks, particularly for income investors who want a strong track record of payment and a positive outlook for future payout. Not only have dividend payouts from Origin Energy fallen over the past 10 years, it has also been highly volatile during this time, with drops of over 25% in some years. This means that dividend hunters should probably steer clear of the stock, at least for now until the track record improves.
Compared to its peers, Origin Energy produces a yield of 2.6%, which is on the low-side for Oil and Gas stocks.
Next Steps:
Now you know to keep in mind the reason why investors should be careful investing in Origin Energy for the dividend. On the other hand, if you are not strictly just a dividend investor, the stock could still be offering 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 pertinent aspects you should further research:
Future Outlook: What are well-informed industry analysts predicting for ORG’s future growth? Take a look at our free research report of analyst consensus for ORG’s outlook.
Valuation: What is ORG 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 ORG 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.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
