Shares of Caltex Australia Limited (ASX:CTX) will begin trading ex-dividend in 4 days. To qualify for the dividend check of AU$0.57 per share, investors must have owned the shares prior to 10 September 2018, which is the last day the company’s management will finalize their list of shareholders to which they will send dividend payments. What does this mean for current shareholders and potential investors? Below, I will explain how holding Caltex Australia can impact your portfolio income stream, by analysing the stock’s most recent financial data and dividend attributes.

See our latest analysis for Caltex Australia

5 questions I ask before picking a dividend stock

If you are a dividend investor, you should always assess these five key metrics:

• Is it the top 25% annual dividend yield payer?

• Does it consistently pay out dividends without missing a payment of significantly cutting payout?

• Has it increased its dividend per share amount over the past?

• Can it afford to pay the current rate of dividends from its earnings?

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

Does Caltex Australia pass our checks?

The company currently pays out 41.8% of its earnings as a dividend, according to its trailing twelve-month data, meaning the dividend is sufficiently covered by earnings. Going forward, analysts expect CTX’s payout to increase to 51.3% of its earnings, which leads to a dividend yield of 4.0%. However, EPS is forecasted to fall to A$2.35 in the upcoming year. Therefore, although payout is expected to increase, the fall in earnings may not equate to higher dividend income.

If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. Although CTX’s per share payments have increased in the past 10 years, it has not been a completely smooth ride. Investors have seen reductions in the dividend per share in the past, although, it has picked up again.

Relative to peers, Caltex Australia produces a yield of 4.0%, which is high for Oil and Gas stocks but still below the market’s top dividend payers.

Next Steps:

Keeping in mind the dividend characteristics above, Caltex Australia is definitely worth considering for investors looking to build a dedicated income portfolio. Given that this is purely a dividend analysis, 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. I’ve put together three important aspects you should further research: