Important news for shareholders and potential investors in Spark Energy Inc (NASDAQ:SPKE): The dividend payment of $0.18 per share will be distributed into shareholder on 14 December 2017, and the stock will begin trading ex-dividend at an earlier date, 28 November 2017. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I examine SPKE’s latest financial data to analyse its dividend characteristics. See our latest analysis for SPKE
5 checks you should do on 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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Does it consistently pay out dividends without missing a payment of significantly cutting payout?
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Has it increased its dividend per share amount over the past?
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Is is able to pay the current rate of dividends from its earnings?
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Will it have the ability to keep paying its dividends going forward?
Does Spark Energy pass our checks?
Spark Energy has a payout ratio of 83.67%, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting lower payout ratio of 64.82%, leading to a dividend yield of around 5.83%. Furthermore, EPS is also forecasted to fall to $0.73 in the upcoming year. The lower EPS on top of a lower payout ratio will lead to a fall in dividend payment moving forward. 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. The reality is that it is too early to consider Spark Energy as a dividend investment. It has only been consistently paying dividends for 3 years, however, standard practice for reliable payers is to look for a 10-year minimum track record. Relative to peers, SPKE has a yield of 5.80%, which is high for electric utilities stocks.
What this means for you:
Are you a shareholder?
Are you a shareholder? Investors of Spark Energy can continue to expect strong dividends from the stock moving forward. With its favorable dividend characteristics, SPKE is one worth keeping around in your income portfolio. But, depending on your current holdings, it may be valuable exploring other income stocks to enhance your diversification, or even look at high-growth stocks to complement your steady income stocks. I recommend continuing your research by checking out my interactive free list of dividend rockstars as well as high-growth stocks to potentially add to your holdings.
Are you a potential investor? With this in mind, I definitely rank Spark Energy as a strong dividend stock, and makes it worth further research for anyone who likes steady income generation from their portfolio. I also recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. No matter how much of a cash cow Spark Energy is, it is not worth an infinite price. Is SPKE still a bargain? Check our latest free analysis to find out!
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.