MENU

Dividend report card: APA Group

The APA Group (ASX: APA) is a leading energy infrastructure business that has been a top dividend stock over the last 10 years which makes it an ideal candidate for income investors looking for potential investments to analyse.

Here are its key metrics:

  • Dividend yield. APA Group has a 20% franked dividend yield of 5.1% compared to a market average of 3.8% and a sector average of 5%. Its peers AGL Energy Ltd (ASX: AGL) and AusNet Services  (ASX: AST) have dividend yields of 3.7% (80% franked) and 5% respectively.
  • Dividend payout ratio. APA Group has a dividend payout ratio of 205% i.e. 205% of its FY 2017 profits were paid out as a dividend. This is quite high and raises concerns about the sustainability of its dividends. AGL in comparison has a dividend payout ratio of 113%.
  • Dividend growth rate. APA Group has an average 5-year dividend growth rate of 5.4% and a 10 year dividend growth rate of 4.9%. AGL in comparison has superior 5 year and 10 year growth rates at 9.2% and 7% respectively.
  • Dividend stability. APA Group has a dividend stability of 99.9% which is slightly higher than the sector average of 97.8%.
  • Valuation. APA Group has a PE ratio of 39 which is higher than the sector average of 26 and the market average of 17. AGL’s PE ratio in comparison is 20. AGL’s price to earnings growth ratio of 0.40 also suggests a more conservative valuation compared to APA Group’s 10.74 and the sector average of 4.33.
  • Future prospects. APA Group’s status as Australia’s largest provider of gas infrastructure like pipelines and distribution centres provides it with a massive competitive advantage and significant barriers to entry in the future.

Overall, whilst APA Group’s wide moat makes it attractive, the fundamentals suggest that AGL Energy might be a better prospect going forward. Top broker Goldman Sachs also rate AGL as a ‘buy’ given their forecast of a rebound in the wholesale electricity forward curve.

OUR #1 dividend pick to grow your wealth over the new financial year is revealed for FREE here!

Financial year 2018 is here and The Motley Fool’s dividend detective Andrew Page has revealed his must buy dividend share to grow your wealth in 2018.

You might not know this market leader's name, but it's rapidly expanding into a highly profitable niche market here in Australia. Even better, the shares boast a strong, fully franked dividend that should balloon in the years to come. In other words, we're looking at the holy grail of incredible long-term growth potential AND income you can watch accruing in your account in real time!

Simply click here to grab your FREE copy of this up-to-the-minute research report on our #1 dividend share recommendation now.

Motley Fool contributor Kevin Gandiya has no position in any of the stocks mentioned.

You can follow Kevin on Twitter @KevinGandiya.

The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The 5 mining stocks we’re recommending in 2019…

For decades, Australian mining companies have minted money for individual investors like you and me. But if you believe the pundits and talking heads on TV, those days are long gone. Finito! Behind us forever…

We say nothing could be further from the truth. To earn the really massive returns, you’ve got to fish where others aren’t fishing—and the mining sector could be primed for a resurgence. That’s why top Motley Fool analysts just revealed their exciting new research on 5 ASX miners they believe could help you profit in 2019 and beyond…

Including:

The best way we see to play the global zinc shortage… Our #1 favourite large-cap miner (hint: it’s not BHP)… one early-stage gold miner we think could hit the motherlode… Plus two more surprising companies you probably haven’t heard of yet!

For free access to our brand-new research, simply click here or the link below. But be warned, this research is available free for a limited time only, and we reserve the right to withdraw it at any time.

Click here for your FREE report!