Should You Buy Warrior Met Coal, Inc. (NYSE:HCC) For Its Upcoming Dividend In 2 Days?
Warrior Met Coal, Inc. (NYSE:HCC) stock is about to trade ex-dividend in 2 days time. If you purchase the stock on or after the 4th of May, you won't be eligible to receive this dividend, when it is paid on the 11th of May.
Warrior Met Coal's next dividend payment will be US$0.05 per share, and in the last 12 months, the company paid a total of US$0.20 per share. Based on the last year's worth of payments, Warrior Met Coal stock has a trailing yield of around 1.6% on the current share price of $12.55. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. As a result, readers should always check whether Warrior Met Coal has been able to grow its dividends, or if the dividend might be cut.
Check out our latest analysis for Warrior Met Coal
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. Warrior Met Coal paid out just 4.8% of its profit last year, which we think is conservatively low and leaves plenty of margin for unexpected circumstances.
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. If earnings fall far enough, the company could be forced to cut its dividend. For this reason, we're glad to see Warrior Met Coal's earnings per share have risen 17% per annum over the last five years. The company has managed to grow earnings at a rapid rate, while reinvesting most of the profits within the business. This will make it easier to fund future growth efforts and we think this is an attractive combination - plus the dividend can always be increased later.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Warrior Met Coal's dividend payments are broadly unchanged compared to where they were three years ago.
The Bottom Line
Is Warrior Met Coal worth buying for its dividend? Typically, companies that are growing rapidly and paying out a low fraction of earnings are keeping the profits for reinvestment in the business. This is one of the most attractive investment combinations under this analysis, as it can create substantial value for investors over the long run. We think this is a pretty attractive combination, and would be interested in investigating Warrior Met Coal more closely.
While it's tempting to invest in Warrior Met Coal for the dividends alone, you should always be mindful of the risks involved. In terms of investment risks, we've identified 3 warning signs with Warrior Met Coal and understanding them should be part of your investment process.
A common investment mistake is buying the first interesting stock you see. Here you can find a list of promising dividend stocks with a greater than 2% yield and an upcoming dividend.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.
