Shares of Rural Electrification Corporation Limited (NSEI:RECLTD) will begin trading ex-dividend in 3 days. To qualify for the dividend check of ₹7.4 per share, investors must have owned the shares prior to 15 February 2018, which is the last day the company’s management will finalize their list of shareholders to which they will send dividend payments. Should you diversify into Rural Electrification and boost your portfolio income stream? Well, keep on reading because today, I’m going to look at the latest data and analyze the stock and its dividend property in further detail. See our latest analysis for Rural Electrification

5 questions to ask before buying a dividend stock

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

• Is it paying an annual yield above 75% of dividend payers?

• Has it consistently paid a stable dividend without missing a payment or drastically cutting payout?

• Has dividend per share amount increased 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?

How does Rural Electrification fare?

Rural Electrification has a trailing twelve-month payout ratio of 30.19%, which means that the dividend is covered by earnings. Going forward, analysts expect RECLTD’s payout to remain around the same level at 28.76% of its earnings, which leads to a dividend yield of around 6.03%. In addition to this, EPS is forecasted to fall to ₹26.1 in the upcoming year. If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. 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, Rural Electrification generates a yield of 6.70%, which is high for Diversified Financial stocks.

Next Steps:

With this in mind, I definitely rank Rural Electrification as a strong dividend stock, and makes it worth further research for anyone who likes steady income generation from their 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 pertinent factors you should further research:

• 1. Future Outlook: What are well-informed industry analysts predicting for RECLTD’s future growth? Take a look at our free research report of analyst consensus for RECLTD’s outlook.

• 2. Valuation: What is RECLTD 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 RECLTD is currently mispriced by the market.

• 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.