Cactus Inc's Dividend Analysis
Assessing the Sustainability of Cactus Inc's Upcoming Dividend Payment
Cactus Inc (NYSE:WHD) recently announced a dividend of $0.12 per share, payable on 2024-03-14, with the ex-dividend date set for 2024-02-23. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into Cactus Inc's dividend performance and assess its sustainability.
What Does Cactus Inc Do?
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Cactus Inc is engaged in the designing, manufacturing, and sale of wellheads and pressure control equipment. Its principal products include Cactus SafeDrill wellhead systems, frac stacks, zipper manifolds, and production trees. The company also provides mission-critical field services, including service crews to assist with the installation, maintenance, and safe handling of the wellhead and pressure control equipment, as well as repair services for equipment that it sells or rents. It sells or rents its products principally for onshore unconventional oil and gas wells that are utilized during the drilling, completion (including fracturing), and production.
A Glimpse at Cactus Inc's Dividend History
Cactus Inc has maintained a consistent dividend payment record since 2019. Dividends are currently distributed on a quarterly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Cactus Inc's Dividend Yield and Growth
As of today, Cactus Inc currently has a 12-month trailing dividend yield of 1.03% and a 12-month forward dividend yield of 1.07%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, Cactus Inc's annual dividend growth rate was 69.70%. Based on Cactus Inc's dividend yield and five-year growth rate, the 5-year yield on cost of Cactus Inc stock as of today is approximately 1.03%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-09-30, Cactus Inc's dividend payout ratio is 0.16.
Cactus Inc's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Cactus Inc's profitability 7 out of 10 as of 2023-09-30, suggesting good profitability prospects. The company has reported net profit in 7 years out of the past 10 years.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Cactus Inc's growth rank of 7 out of 10 suggests that the company's growth trajectory is good relative to its competitors.
Revenue is the lifeblood of any company, and Cactus Inc's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Cactus Inc's revenue has increased by approximately 2.60% per year on average, a rate that underperforms approximately 67.29% of global competitors.
The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, Cactus Inc's earnings increased by approximately -1.40% per year on average, a rate that underperforms approximately 71.89% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of -14.80%, which underperforms approximately 91.11% of global competitors.
Next Steps
In conclusion, while Cactus Inc demonstrates a strong dividend history and a promising dividend yield, investors must weigh the company's payout ratio, profitability, and mixed growth metrics when considering the sustainability of future dividends. The robust dividend growth rate and prudent payout ratio bode well for Cactus Inc, but the underperformance in certain growth metrics suggests a need for cautious optimism. Investors should monitor these indicators to gauge the long-term prospects of Cactus Inc's dividend payments. GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
This article first appeared on GuruFocus.
