A sizeable part of portfolio returns can be produced by dividend stocks due to their contribution to compounding returns in the long run. Baker Hughes, a GE company (NYSE:BHGE) has started paying a dividend to shareholders. It currently trades on a yield of 2.7%. Let’s dig deeper into whether Baker Hughes a GE should have a place in your portfolio.
Baker Hughes a GE has a trailing twelve-month payout ratio of 158%, meaning the dividend is not sufficiently covered by its earnings. However, going forward, analysts expect BHGE’s payout to fall into a more sustainable range of 29% of its earnings. Assuming a constant share price, this equates to a dividend yield of 2.8%. Furthermore, EPS should increase to $1.1, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment.
Source: Simply Wall St.
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