Halliburton (NYSE:HAL) Is Paying Out A Larger Dividend Than Last Year
Halliburton Company's (NYSE:HAL) dividend will be increasing from last year's payment of the same period to $0.16 on 29th of March. Based on this payment, the dividend yield for the company will be 1.6%, which is fairly typical for the industry.
See our latest analysis for Halliburton
Halliburton's Earnings Easily Cover The Distributions
We aren't too impressed by dividend yields unless they can be sustained over time. However, Halliburton's earnings easily cover the dividend. As a result, a large proportion of what it earned was being reinvested back into the business.
Looking forward, earnings per share is forecast to rise by 107.0% over the next year. If the dividend continues along recent trends, we estimate the payout ratio will be 12%, which is in the range that makes us comfortable with the sustainability of the dividend.
Dividend Volatility
The company has a long dividend track record, but it doesn't look great with cuts in the past. The annual payment during the last 10 years was $0.36 in 2013, and the most recent fiscal year payment was $0.64. This implies that the company grew its distributions at a yearly rate of about 5.9% over that duration. It's good to see the dividend growing at a decent rate, but the dividend has been cut at least once in the past. Halliburton might have put its house in order since then, but we remain cautious.
The Dividend Looks Likely To Grow
Given that the dividend has been cut in the past, we need to check if earnings are growing and if that might lead to stronger dividends in the future. It's encouraging to see that Halliburton has been growing its earnings per share at 10% a year over the past five years. Halliburton definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.
We Really Like Halliburton's Dividend
In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. 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. All of these factors considered, we think this has solid potential as a dividend stock.
Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For example, we've picked out 3 warning signs for Halliburton that investors should know about before committing capital to this stock. 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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