Do Helmerich & Payne’s Dividend and Dividend Yields Matter?
The Effect of Helmerich & Payne's Early Contract Terminations
Helmerich & Payne’s dividend and dividend yields
Helmerich & Payne (HP) kept its quarterly dividend per share (or DPS) unchanged in fiscal 2Q15 over a year ago. Earlier, the company increased its DPS from fiscal 2Q14 to fiscal 3Q14 by 10% to $0.69 compared to $0.63. Although Helmerich & Payne’s net income decreased significantly through fiscal 2Q16, since then, its dividend has remained unchanged.
HP’s steady dividend reflects management’s confidence in the company’s balance sheet and growth prospect during this period. HP’s industry peer National Oilwell Varco (NOV) slashed its quarterly dividend by 90% to $0.05 in April compared to a year earlier.
Dividend yield, expressed as dividend per share relative to the share price, has generally been on the rise from fiscal 2Q14 until fiscal 2Q16. During that period, HP’s share price declined 45%, while its DPS has remained unchanged since fiscal 3Q14. HP’s dividend yield decreased from 5.1% on December 31, 2015, to 4.7% on March 31, 2016.
From fiscal 2009 to fiscal 2015, HP’s share price increased 34%, while its DPS rose 12.7x. In effect, dividend yield increased from 0.5% as of December 31, 2009, to 5.1% as of December 31, 2015.
Will Helmerich & Payne increase its dividend in 2016?
Helmerich & Payne intends to keep its dividend unchanged in fiscal 2016 compared to fiscal 2015. HP’s strong liquidity position, long-term contract backlog, and reduced capex (capital expenditures) should help maintain the existing dividend level. Helmerich & Payne makes up 0.03% of the SPDR S&P 500 ETF (SPY).
Next, we’ll take a look at Helmerich & Payne’s historical valuation multiples.
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