Investors who want to cash in on Apache Corporation’s (NYSE:APA) upcoming dividend of $0.25 per share have only 3 days left to buy the shares before its ex-dividend date, 20 April 2018, in time for dividends payable on the 22 May 2018. What does this mean for current shareholders and potential investors? Below, I will explain how holding Apache can impact your portfolio income stream, by analysing the stock’s most recent financial data and dividend attributes. View our latest analysis for Apache
How I analyze a dividend stock
When researching a dividend stock, I always follow the following screening criteria:
- Is it paying an annual yield above 75% of dividend payers?
- Has it paid dividend every year without dramatically reducing payout in the past?
- Has dividend per share risen in the past couple of years?
- Does earnings amply cover its dividend payments?
- Will it be able to continue to payout at the current rate in the future?
How does Apache fare?
The company currently pays out 29.22% 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 50.75%, leading to a dividend yield of around 2.47%. However, EPS is forecasted to fall to $1.51 in the upcoming year. Therefore, although payout is expected to increase, the fall in earnings may not equate to higher dividend income. 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. APA has increased its DPS from $0.6 to $1 in the past 10 years. It has also been paying out dividend consistently during this time, as you’d expect for a company increasing its dividend levels. These are all positive signs of a great, reliable dividend stock. Compared to its peers, Apache produces a yield of 2.46%, which is on the low-side for Oil and Gas stocks.
Considering the dividend attributes we analyzed above, Apache is definitely worth keeping an eye on for someone looking to build a dedicated income portfolio. 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. There are three essential factors you should further examine:
- Future Outlook: What are well-informed industry analysts predicting for APA’s future growth? Take a look at our free research report of analyst consensus for APA’s outlook.
- Valuation: What is APA 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 APA is currently mispriced by the market.
- 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.