Equitrans Midstream (NYSE:ETRN) Will Pay A Dividend Of $0.15
Equitrans Midstream Corporation's (NYSE:ETRN) investors are due to receive a payment of $0.15 per share on 14th of February. The dividend yield will be 8.3% based on this payment which is still above the industry average.
Check out our latest analysis for Equitrans Midstream
Equitrans Midstream's Dividend Is Well Covered By Earnings
If the payments aren't sustainable, a high yield for a few years won't matter that much. Even though Equitrans Midstream isn't generating a profit, it is generating healthy free cash flows that easily cover the dividend. In general, cash flows are more important than the more traditional measures of profit so we feel pretty comfortable with the dividend at this level.
Analysts expect a massive rise in earnings per share in the next year. If the dividend extends its recent trend, estimates say the dividend could reach 6.6%, which we would be comfortable to see continuing.
Equitrans Midstream Is Still Building Its Track Record
The dividend doesn't have the best track record, but with only 4 years of history, we won't make any big conclusions from this. The dividend has gone from an annual total of $1.64 in 2019 to the most recent total annual payment of $0.60. This works out to a decline of approximately 63% over that time. A company that decreases its dividend over time generally isn't what we are looking for.
Dividend Growth Potential Is Shaky
Given that the track record hasn't been stellar, we really want to see earnings per share growing over time. Equitrans Midstream's earnings per share has shrunk at 60% a year over the past five years. A sharp decline in earnings per share is not great from from a dividend perspective. Even conservative payout ratios can come under pressure if earnings fall far enough. It's not all bad news though, as the earnings are predicted to rise over the next 12 months - we would just be a bit cautious until this becomes a long term trend.
Equitrans Midstream's Dividend Doesn't Look Sustainable
Overall, it's nice to see a consistent dividend payment, but we think that longer term, the current level of payment might be unsustainable. In the past, the payments have been unstable, but over the short term the dividend could be reliable, with the company generating enough cash to cover it. We don't think Equitrans Midstream is a great stock to add to your portfolio if income is your focus.
Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. However, there are other things to consider for investors when analysing stock performance. As an example, we've identified 1 warning sign for Equitrans Midstream that you should be aware of before investing. Is Equitrans Midstream 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.
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