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Important news for shareholders and potential investors in Electricité de France SA (EPA:EDF): The dividend payment of €0.15 per share will be distributed to shareholders on 10 December 2018, and the stock will begin trading ex-dividend at an earlier date, 06 December 2018. Should you diversify into Electricité de France 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.
Check out our latest analysis for Electricité de France
5 checks you should use to assess a dividend stock
When assessing a stock as a potential addition to my dividend Portfolio, I look at these five areas:
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Is it paying an annual yield above 75% of dividend payers?
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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 amount increased over the past?
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Does earnings amply cover its dividend payments?
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Will it be able to continue to payout at the current rate in the future?
Does Electricité de France pass our checks?
Electricité de France has a trailing twelve-month payout ratio of 60%, which means that the dividend is covered by earnings. However, going forward, analysts expect EDF’s payout to fall to 49% of its earnings, which leads to a dividend yield of 3.0%. However, EPS should increase to €0.81, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment.
When thinking about whether a dividend is sustainable, another factor to consider is the cash flow. A company with strong cash flow, relative to earnings, can sometimes sustain a high pay out ratio.
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. Dividend payments from Electricité de France have been volatile in the past 10 years, with some years experiencing significant drops of over 25%. This means that dividend hunters should probably steer clear of the stock, at least for now until the track record improves.
In terms of its peers, Electricité de France generates a yield of 3.2%, which is on the low-side for Electric Utilities stocks.
Next Steps:
Whilst there are few things you may like about Electricité de France from a dividend stock perspective, the truth is that overall it probably is not the best choice for a dividend investor. But if you are not exclusively a dividend investor, the stock could still be an interesting investment opportunity. 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 fundamental aspects you should further examine: