Dividends play a key role in compounding returns over time and can form a large part of our portfolio return. Historically, Adams Resources & Energy Inc (NYSEMKT:AE) has paid dividends to shareholders, and these days it yields 2.0%. Should it have a place in your portfolio? Let’s take a look at Adams Resources & Energy in more detail.

Check out our latest analysis for Adams Resources & Energy

5 checks you should use to assess a dividend stock

Whenever I am looking at a potential dividend stock investment, I always check these five metrics:

• Is it the top 25% annual dividend yield payer?

• Does it consistently pay out dividends without missing a payment of significantly cutting payout?

• Has dividend per share risen in the past couple of years?

• Can it afford to pay the current rate of dividends from its earnings?

• Will it have the ability to keep paying its dividends going forward?

How well does Adams Resources & Energy fit our criteria?

Adams Resources & Energy has a trailing twelve-month payout ratio of 68.5%, which means that the dividend is covered by earnings. Furthermore, analysts have not forecasted a dividends per share for the future, which makes it hard to determine the yield shareholders should expect, and whether the current payout is sustainable, moving forward.

If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. AE has increased its DPS from $0.47 to $0.88 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 AE a true dividend rockstar.

In terms of its peers, Adams Resources & Energy generates a yield of 2.0%, which is on the low-side for Oil and Gas stocks.

Next Steps:

Considering the dividend attributes we analyzed above, Adams Resources & Energy is definitely worth keeping an eye on for someone looking to build a dedicated income portfolio. Given that this is purely a dividend analysis, you should always research extensively before deciding whether or not a stock is an appropriate investment for you. I always recommend analysing the company’s fundamentals and underlying business before making an investment decision. Below, I’ve compiled three relevant aspects you should look at:

1. Valuation: What is AE 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 AE is currently mispriced by the market.

2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Adams Resources & Energy’s board and the CEO’s back ground.

3. 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 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.