Important news for shareholders and potential investors in American States Water Company (NYSE:AWR): The dividend payment of $0.26 per share will be distributed into shareholder on 01 March 2018, and the stock will begin trading ex-dividend at an earlier date, 14 February 2018. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I take a deeper dive into American States Water’s latest financial data to analyse its dividend attributes. See our latest analysis for American States Water

5 questions to ask before buying a dividend stock

When assessing a stock as a potential addition to my dividend Portfolio, I look at these five areas:

• Is their annual yield among the top 25% of dividend payers?

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

• Has the amount of dividend per share grown over the past?

• Is it able to pay the current rate of dividends from its earnings?

• Will it be able to continue to payout at the current rate in the future?

Does American States Water pass our checks?

The company currently pays out 53.31% of its earnings as a dividend, according to its trailing twelve-month data, meaning the dividend is sufficiently covered by earnings. Going forward, analysts expect AWR’s payout to remain around the same level at 54.91% of its earnings, which leads to a dividend yield of around 2.05%. Furthermore, EPS is forecasted to fall to $1.82 in the upcoming year. If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. AWR has increased its DPS from $0.5 to $1.02 in the past 10 years. During this period it has not missed a payment, as one would expect for a company increasing its dividend. These are all positive signs of a great, reliable dividend stock. In terms of its peers, American States Water has a yield of 1.95%, which is on the low-side for Water Utilities stocks.

Next Steps:

With these dividend metrics in mind, I definitely rank American States Water as a strong income stock, and is worth further research for anyone who considers dividends an important part of their portfolio strategy. 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 pertinent factors you should further examine:

• 1. Historical Performance: What has AWR’s returns been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.

• 2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on American States Water’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 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.