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Dividends play a key role in compounding returns over time and can form a large part of our portfolio return. Caltex Australia Limited (ASX:CTX) has returned to shareholders over the past 10 years, an average dividend yield of 3.00% annually. Should it have a place in your portfolio? Let’s take a look at Caltex Australia in more detail. Check out our latest analysis for Caltex Australia
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:
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Is its annual yield among the top 25% of dividend-paying companies?
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Does it consistently pay out dividends without missing a payment of significantly cutting payout?
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Has it increased its dividend per share amount over the past?
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Is its earnings sufficient to payout dividend at the current rate?
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Will it have the ability to keep paying its dividends going forward?
How does Caltex Australia fare?
The current trailing twelve-month payout ratio for the stock is 52.43%, which means that the dividend is covered by earnings. In the near future, analysts are predicting a payout ratio of 49.71%, leading to a dividend yield of around 3.74%. Moreover, EPS should increase to A$2.43. 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. Whilst its per-share payments have increased during the past 10 years, there has been some hiccups. Investors have seen reductions in the dividend per share in the past, although, it has picked up again. Compared to its peers, Caltex Australia has a yield of 3.38%, which is high for Oil and Gas stocks but still below the market’s top dividend payers.
Next Steps:
Considering the dividend attributes we analyzed above, Caltex Australia is definitely worth keeping an eye on for someone looking to build a dedicated income portfolio. Given that this is purely a dividend analysis, I recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. I’ve put together three pertinent factors you should look at:
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1. Future Outlook: What are well-informed industry analysts predicting for CTX’s future growth? Take a look at our free research report of analyst consensus for CTX’s outlook.
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2. Valuation: What is CTX 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 CTX is currently mispriced by the market.
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3. 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.