There is a lot to be liked about Mangalore Refinery and Petrochemicals Limited (NSE:MRPL) as an income stock. It has paid dividends over the past 10 years. The stock currently pays out a dividend yield of 4.7%, and has a market cap of ₹120.9b. Should it have a place in your portfolio? Let’s take a look at Mangalore Refinery and Petrochemicals in more detail.

See our latest analysis for Mangalore Refinery and Petrochemicals

5 questions to ask before buying a dividend stock

Whenever I am looking at a potential dividend stock investment, I always check these five metrics:

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

• Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?

• Has dividend per share amount increased over the past?

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

• Will it be able to continue to payout at the current rate in the future?

How does Mangalore Refinery and Petrochemicals fare?

The current trailing twelve-month payout ratio for the stock is 26%, meaning the dividend is sufficiently covered by earnings. Going forward, analysts expect MRPL’s payout to remain around the same level at 25% of its earnings, which leads to a dividend yield of around 5.2%. Furthermore, EPS is forecasted to fall to ₹10.17 in the upcoming year.

When assessing the forecast sustainability of a dividend it is also worth considering the cash flow of the business. Cash flow is important because companies with strong cash flow can usually sustain higher payout ratios.

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. Although MRPL’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.

In terms of its peers, Mangalore Refinery and Petrochemicals produces a yield of 4.7%, which is high for Oil and Gas stocks.

Next Steps:

Considering the dividend attributes we analyzed above, Mangalore Refinery and Petrochemicals is definitely worth keeping an eye on for someone 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 fundamental aspects you should further research: