Crescent Point Energy (TSE:CPG) Is Increasing Its Dividend To CA$0.10
Crescent Point Energy Corp. (TSE:CPG) will increase its dividend from last year's comparable payment on the 3rd of April to CA$0.10. The payment will take the dividend yield to 4.5%, which is in line with the average for the industry.
View our latest analysis for Crescent Point Energy
Crescent Point Energy's Dividend Is Well Covered By Earnings
We aren't too impressed by dividend yields unless they can be sustained over time. However, Crescent Point Energy's earnings easily cover the dividend. This means that most of its earnings are being retained to grow the business.
EPS is set to fall by 76.9% over the next 12 months. If the dividend continues along the path it has been on recently, we estimate the payout ratio could be 22%, which is comfortable for the company to continue in the future.
The company's dividend history has been marked by instability, with at least one cut in the last 10 years. Since 2013, the dividend has gone from CA$2.76 total annually to CA$0.435. The dividend has fallen 84% over that period. A company that decreases its dividend over time generally isn't what we are looking for.
The Dividend Looks Likely To Grow
Given that the track record hasn't been stellar, we really want to see earnings per share growing over time. It's encouraging to see that Crescent Point Energy has been growing its earnings per share at 36% a year over the past five years. A low payout ratio gives the company a lot of flexibility, and growing earnings also make it very easy for it to grow the dividend.
We Really Like Crescent Point Energy's Dividend
Overall, a dividend increase is always good, and we think that Crescent Point Energy is a strong income stock thanks to its track record and growing earnings. The earnings easily cover the company's distributions, and the company is generating plenty of cash. However, it is worth noting that the earnings are expected to fall over the next year, which may not change the long term outlook, but could affect the dividend payment in the next 12 months. All of these factors considered, we think this has solid potential as a dividend stock.
It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. However, there are other things to consider for investors when analysing stock performance. Just as an example, we've come across 3 warning signs for Crescent Point Energy you should be aware of, and 1 of them makes us a bit uncomfortable. If you are a dividend investor, you might also want to look at our curated list of high yield 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.
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