Yahoo Finance 4 Days Left Until The New Zealand Refining Company Limited (NZSE:NZR) Trades Ex-Dividend,
Attention dividend hunters! The New Zealand Refining Company Limited (NZSE:NZR) will be distributing its dividend of NZ$0.035 per share on the 20 September 2018, and will start trading ex-dividend in 4 days time on the 12 September 2018. Is this future income a persuasive enough catalyst for investors to think about New Zealand Refining as an investment today? Below, 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 New Zealand Refining
5 questions to ask before buying a dividend stock
If you are a dividend investor, you should always assess these five key metrics:
Does it pay an annual yield higher than 75% of dividend payers?
Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?
Has the amount of dividend per share grown over the past?
Can it afford to pay the current rate of dividends from its earnings?
Will the company be able to keep paying dividend based on the future earnings growth?
Does New Zealand Refining pass our checks?
New Zealand Refining has a trailing twelve-month payout ratio of 116%, meaning the dividend is not sufficiently covered by its earnings. In the near future, analysts are predicting a payout ratio of 114%, leading to a dividend yield of 7.7%. Moreover, EPS should increase to NZ$0.16.
When assessing the forecast sustainability of a dividend it is also worth considering the cash flow of the business. A business with strong cash flow can sustain a higher divided payout ratio than a company with weak cash flow.
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. Not only have dividend payouts from New Zealand Refining fallen over the past 10 years, it has also been highly volatile during this time, with drops of over 25% in some years. These characteristics do not bode well for income investors seeking reliable stream of dividends.
Relative to peers, New Zealand Refining generates a yield of 7.0%, which is high for Oil and Gas stocks.
Next Steps:
Now you know to keep in mind the reason why investors should be careful investing in New Zealand Refining for the dividend. 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 urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. I’ve put together three fundamental aspects you should look at:
Future Outlook: What are well-informed industry analysts predicting for NZR’s future growth? Take a look at our free research report of analyst consensus for NZR’s outlook.
Valuation: What is NZR 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 NZR is currently mispriced by the market.
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 past 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. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
