Yahoo Finance Granite Ridge Resources (NYSE:GRNT) Is Paying Out A Dividend Of $0.11
Granite Ridge Resources, Inc. (NYSE:GRNT) has announced that it will pay a dividend of $0.11 per share on the 15th of March. This means the annual payment is 7.1% of the current stock price, which is above the average for the industry.
Check out our latest analysis for Granite Ridge Resources
Granite Ridge Resources' Payment Has Solid Earnings Coverage
While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. Prior to this announcement, Granite Ridge Resources' earnings easily covered the dividend, but free cash flows were negative. With the company not bringing in any cash, paying out to shareholders is bound to become difficult at some point.
EPS is set to fall by 18.9% over the next 12 months. If the dividend continues along the path it has been on recently, we estimate the payout ratio could be 59%, which is comfortable for the company to continue in the future.
Granite Ridge Resources Doesn't Have A Long Payment History
It's not possible for us to make a backward looking judgement just based on a short payment history. This doesn't mean that the company can't pay a good dividend, but just that we want to wait until it can prove itself.
The Dividend Looks Likely To Grow
Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. We are encouraged to see that Granite Ridge Resources has grown earnings per share at 43% per year over the past three years. Rapid earnings growth and a low payout ratio suggest this company has been effectively reinvesting in its business. Should that continue, this company could have a bright future.
In Summary
Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. While the low payout ratio is a redeeming feature, this is offset by the minimal cash to cover the payments. We don't think Granite Ridge Resources is a great stock to add to your portfolio if income is your focus.
It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For example, we've identified 4 warning signs for Granite Ridge Resources (2 make us uncomfortable!) that you should be aware of before investing. Is Granite Ridge Resources not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
