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A large part of investment returns can be generated by dividend-paying stock given their role in compounding returns over time. Gujarat Pipavav Port Limited (NSE:GPPL) has recently paid dividends to shareholders, and currently yields 3.4%. Should it have a place in your portfolio? Let’s take a look at Gujarat Pipavav Port in more detail.
View our latest analysis for Gujarat Pipavav Port
5 checks you should do on a dividend stock
When researching a dividend stock, I always follow the following screening criteria:
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Is its annual yield among the top 25% of dividend-paying companies?
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Has it consistently paid a stable dividend without missing a payment or drastically cutting payout?
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Has dividend per share risen in the past couple of years?
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Can it afford to pay the current rate of dividends from its earnings?
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Based on future earnings growth, will it be able to continue to payout dividend at the current rate?
Does Gujarat Pipavav Port pass our checks?
Gujarat Pipavav Port has a trailing twelve-month payout ratio of 74%, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting a payout ratio of 73%, leading to a dividend yield of around 4.3%. Furthermore, EPS should increase to ₹4.85.
When thinking about whether a dividend is sustainable, another factor to consider is the cash flow. A business with strong cash flow can sustain a higher divided payout ratio than a company with weak cash flow.
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. The reality is that it is too early to consider Gujarat Pipavav Port as a dividend investment. It has only been consistently paying dividends for 2 years, however, standard practice for reliable payers is to look for a 10-year minimum track record.
Relative to peers, Gujarat Pipavav Port has a yield of 3.4%, which is high for Infrastructure stocks.
Next Steps:
With these dividend metrics in mind, I definitely rank Gujarat Pipavav Port as a strong income stock, and is worth further research for anyone who considers dividends an important part of their portfolio strategy. 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. Below, I’ve compiled three fundamental aspects you should further research: