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Dividends can be underrated but they form a large part of investment returns, playing an important role in compounding returns in the long run. In the past 10 years Auckland International Airport Limited (NZSE:AIA) has returned an average of 3.00% per year to investors in the form of dividend payouts. Should it have a place in your portfolio? Let’s take a look at Auckland International Airport in more detail. See our latest analysis for Auckland International Airport
5 questions I ask before picking a dividend stock
If you are a dividend investor, you should always assess these five key metrics:
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Does it pay an annual yield higher than 75% of dividend payers?
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Has it paid dividend every year without dramatically reducing payout in the past?
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Has dividend per share amount increased over the past?
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Is it able to pay the current rate of dividends from its earnings?
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Will it have the ability to keep paying its dividends going forward?
How well does Auckland International Airport fit our criteria?
Auckland International Airport has a trailing twelve-month payout ratio of 71.00%, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting a higher payout ratio of 89.29%, leading to a dividend yield of around 3.51%. However, EPS is forecasted to fall to NZ$0.29 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. Although AIA’s per share payments have increased in the past 10 years, it has not been a completely smooth ride. Shareholders would have seen a few years of reduced payments in this time. Compared to its peers, Auckland International Airport generates a yield of 3.35%, which is high for Infrastructure stocks but still below the market’s top dividend payers.
Next Steps:
Keeping in mind the dividend characteristics above, Auckland International Airport is definitely worth considering for investors looking to build a dedicated income 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 key aspects you should look at:
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Future Outlook: What are well-informed industry analysts predicting for AIA’s future growth? Take a look at our free research report of analyst consensus for AIA’s outlook.
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Historical Performance: What has AIA’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.
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Other 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.