Yahoo Finance Hess Midstream's (NYSE:HESM) Dividend Will Be Increased To $0.6516
Hess Midstream LP's (NYSE:HESM) dividend will be increasing from last year's payment of the same period to $0.6516 on 14th of May. This will take the dividend yield to an attractive 7.3%, providing a nice boost to shareholder returns.
See our latest analysis for Hess Midstream
Hess Midstream's Dividend Is Well Covered By Earnings
Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. Prior to this announcement, Hess Midstream was paying out 83% of earnings and more than 75% of free cash flows. This indicates that the company is more focused on returning cash to shareholders than growing the business, but it is still in a reasonable range to continue with.
EPS is set to grow by 75.8% over the next year. If the dividend continues along recent trends, we estimate the payout ratio could reach 95%, which is on the higher side, but certainly still feasible.
Hess Midstream Is Still Building Its Track Record
Even though the company has been paying a consistent dividend for a while, we would like to see a few more years before we feel comfortable relying on it. Since 2017, the annual payment back then was $1.20, compared to the most recent full-year payment of $2.54. This implies that the company grew its distributions at a yearly rate of about 11% over that duration. We're not overly excited about the relatively short history of dividend payments, however the dividend is growing at a nice rate and we might take a closer look.
Hess Midstream Could Grow Its Dividend
The company's investors will be pleased to have been receiving dividend income for some time. It's encouraging to see that Hess Midstream has been growing its earnings per share at 6.9% a year over the past five years. EPS has been growing at a reasonable rate, although with most of the profits being paid out to shareholders, growth prospects could be more limited in the future.
Our Thoughts On Hess Midstream's Dividend
Overall, this is probably not a great income stock, even though the dividend is being raised at the moment. The track record isn't great, and the payments are a bit high to be considered sustainable. We don't think Hess Midstream is a great stock to add to your portfolio if income is your focus.
Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For instance, we've picked out 2 warning signs for Hess Midstream that investors should take into consideration. Is Hess Midstream 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.
