Yahoo Finance Petrus Resources Ltd. (TSE:PRQ) Passed Our Checks, And It's About To Pay A CA$0.01 Dividend
It looks like Petrus Resources Ltd. (TSE:PRQ) is about to go ex-dividend in the next 4 days. The ex-dividend date is one business day before a company's record date, which is the date on which the company determines which shareholders are entitled to receive a dividend. The ex-dividend date is an important date to be aware of as any purchase of the stock made on or after this date might mean a late settlement that doesn't show on the record date. This means that investors who purchase Petrus Resources' shares on or after the 17th of June will not receive the dividend, which will be paid on the 28th of June.
The company's next dividend payment will be CA$0.01 per share, and in the last 12 months, the company paid a total of CA$0.12 per share. Last year's total dividend payments show that Petrus Resources has a trailing yield of 9.0% on the current share price of CA$1.34. If you buy this business for its dividend, you should have an idea of whether Petrus Resources's dividend is reliable and sustainable. As a result, readers should always check whether Petrus Resources has been able to grow its dividends, or if the dividend might be cut.
View our latest analysis for Petrus Resources
Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. Petrus Resources is paying out just 13% of its profit after tax, which is comfortably low and leaves plenty of breathing room in the case of adverse events. That said, even highly profitable companies sometimes might not generate enough cash to pay the dividend, which is why we should always check if the dividend is covered by cash flow. Over the last year, it paid out more than three-quarters (76%) of its free cash flow generated, which is fairly high and may be starting to limit reinvestment in the business.
It's encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don't drop precipitously.
Click here to see how much of its profit Petrus Resources paid out over the last 12 months.
Have Earnings And Dividends Been Growing?
Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If earnings fall far enough, the company could be forced to cut its dividend. It's encouraging to see Petrus Resources has grown its earnings rapidly, up 46% a year for the past five years.
Given that Petrus Resources has only been paying a dividend for a year, there's not much of a past history to draw insight from.
To Sum It Up
Should investors buy Petrus Resources for the upcoming dividend? From a dividend perspective, we're encouraged to see that earnings per share have been growing, the company is paying out less than half of its earnings, and a bit over half its free cash flow. It's a promising combination that should mark this company worthy of closer attention.
While it's tempting to invest in Petrus Resources for the dividends alone, you should always be mindful of the risks involved. Our analysis shows 3 warning signs for Petrus Resources and you should be aware of them before buying any shares.
If you're in the market for strong dividend payers, we recommend checking 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.
