Over the past 10 years Red Eléctrica Corporación SA (BME:REE) has grown its dividend payouts from €0.27 to €0.92. With a market cap of €9.73b, Red Eléctrica Corporación pays out 73.20% of its earnings, leading to a 5.10% yield. Let me elaborate on you why the stock stands out for income investors like myself. Check out our latest analysis for Red Eléctrica Corporación
What Is A Dividend Rock Star?
It is a stock that pays a stable and consistent dividend, having done so reliably for the past decade with the expectation of this continuing into the future. More specifically:
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Its annual yield is among the top 25% of dividend payers
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It has paid dividend every year without dramatically reducing payout in the past
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Its dividend per share amount has increased over the past
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It is able to pay the current rate of dividends from its earnings
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It is able to continue to payout at the current rate in the future
High Yield And Dependable
The company’s dividend yield stands at 5.10%, which is high for Electric Utilities stocks. But the real reason Red Eléctrica Corporación stands out is because it has a high chance of being able to continue to pay dividend at this level for years to come, something that is quite desirable if you are looking to create a portfolio that generates a steady stream of income.
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. REE has increased its DPS from €0.27 to €0.92 in the past 10 years. During this period it has not missed a payment, as one would expect for a company increasing its dividend. This is an impressive feat, which makes REE a true dividend rockstar. The company currently pays out 73.20% of its earnings as a dividend, according to its trailing twelve-month data, which means that the dividend is covered by earnings. In the near future, analysts are predicting a higher payout ratio of 82.44%, leading to a dividend yield of around 5.69%. Moreover, EPS should increase to €1.32. The higher payout forecasted, along with higher earnings, should lead to greater dividend income for investors moving forward.
Next Steps:
With Red Eléctrica Corporación producing strong dividend income for your portfolio over the past few years, you can take comfort in knowing that this stock will still continue to be a top dividend generator moving forward. However, given 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. There are three fundamental factors you should look at: