Canadian Natural Resources (TSE:CNQ) Will Pay A Larger Dividend Than Last Year At CA$1.05
Canadian Natural Resources Limited (TSE:CNQ) will increase its dividend from last year's comparable payment on the 5th of April to CA$1.05. Although the dividend is now higher, the yield is only 4.1%, which is below the industry average.
See our latest analysis for Canadian Natural Resources
Canadian Natural Resources' Payment Has Solid Earnings Coverage
It would be nice for the yield to be higher, but we should also check if higher levels of dividend payment would be sustainable. The last dividend was quite easily covered by Canadian Natural Resources' earnings. This means that a large portion of its earnings are being retained to grow the business.
Looking forward, earnings per share is forecast to rise by 31.4% over the next year. Assuming the dividend continues along recent trends, we think the payout ratio could be 44% by next year, which is in a pretty sustainable range.
Canadian Natural Resources Has A Solid Track Record
The company has an extended history of paying stable dividends. Since 2014, the annual payment back then was CA$0.50, compared to the most recent full-year payment of CA$4.00. This implies that the company grew its distributions at a yearly rate of about 23% over that duration. So, dividends have been growing pretty quickly, and even more impressively, they haven't experienced any notable falls during this period.
The Dividend Looks Likely To Grow
Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. We are encouraged to see that Canadian Natural Resources has grown earnings per share at 29% per year over the past five years. Canadian Natural Resources is clearly able to grow rapidly while still returning cash to shareholders, positioning it to become a strong dividend payer in the future.
We Really Like Canadian Natural Resources' Dividend
Overall, a dividend increase is always good, and we think that Canadian Natural Resources is a strong income stock thanks to its track record and growing earnings. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. Taking this all into consideration, this looks like it could be a good dividend opportunity.
Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. However, there are other things to consider for investors when analysing stock performance. Taking the debate a bit further, we've identified 1 warning sign for Canadian Natural Resources that investors need to be conscious of moving forward. Is Canadian Natural Resources 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.
