Deep Dive into Aris Water Solutions Inc's Dividend Performance
Assessing the Sustainability of the Upcoming Dividend Payment
Aris Water Solutions Inc (NYSE:ARIS) recently announced a dividend of $0.09 per share, payable on 2023-09-28, with the ex-dividend date set for 2023-09-13. 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 deep dive into Aris Water Solutions Inc's dividend performance and assess its sustainability.
What Does Aris Water Solutions Inc Do?
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Aris Water Solutions Inc is an environmental infrastructure and solutions company that helps customers reduce their water and carbon footprints. It has two primary revenue streams. The Produced Water Handling business gathers, transports, and, unless recycled, handles produced water generated from oil and natural gas production. The Water Solutions business develops and operates recycling facilities to treat, store and recycle produced water.
A Glimpse at Aris Water Solutions Inc's Dividend History
Aris Water Solutions Inc has maintained a consistent dividend payment record since 2022. Dividends are currently distributed on a quarterly basis.
Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Aris Water Solutions Inc's Dividend Yield and Growth
As of today, Aris Water Solutions Inc currently has a 12-month trailing dividend yield of 3.60% and a 12-month forward dividend yield of 3.60%. This suggests an expectation of same dividend payments over the next 12 months.
Based on Aris Water Solutions Inc's dividend yield and five-year growth rate, the 5-year yield on cost of Aris Water Solutions Inc stock as of today is approximately 3.60%.
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 2023-06-30, Aris Water Solutions Inc's dividend payout ratio is 1.06, which may suggest that the company's dividend may not be sustainable.
Aris Water Solutions Inc's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Aris Water Solutions Inc's profitability 4 out of 10 as of 2023-06-30, suggesting the dividend may not be sustainable. The company has reported net profit in 3 years out of past 10 years.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Aris Water Solutions Inc's growth rank of 4 out of 10 suggests that the company has poor growth prospects and thus, the dividend may not be sustainable.
Revenue is the lifeblood of any company, and Aris Water Solutions Inc's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Aris Water Solutions Inc's revenue has increased by approximately 25.50% per year on average, a rate that outperforms than approximately 89.63% 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, Aris Water Solutions Inc's earnings increased by approximately -62.20% per year on average, a rate that outperforms than approximately 2.4% of global competitors.
Next Steps
While Aris Water Solutions Inc's dividend payments and growth rate are commendable, the current payout ratio and profitability rank raise questions about the sustainability of the dividends. Moreover, the company's growth metrics suggest poor growth prospects. Therefore, investors should closely monitor these factors while considering this stock for their portfolio. GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
This article first appeared on GuruFocus.
