Should Hi-Crush Partners LP (NYSE:HCLP) Be Part Of Your Portfolio?
A large part of investment returns can be generated by dividend-paying stock given their role in compounding returns over time. Hi-Crush Partners LP (NYSE:HCLP) has returned to shareholders over the past 5 years, an average dividend yield of 5.00% annually. Does Hi-Crush Partners tick all the boxes of a great dividend stock? Below, I’ll take you through my analysis. See our latest analysis for Hi-Crush Partners
5 questions to ask before buying a dividend stock
Whenever I am looking at a potential dividend stock investment, I always check these five metrics:
Is their annual yield among the top 25% of dividend payers?
Has it consistently paid a stable dividend without missing a payment or drastically cutting payout?
Has dividend per share amount increased over the past?
Is its earnings sufficient to payout dividend at the current rate?
Will the company be able to keep paying dividend based on the future earnings growth?
How does Hi-Crush Partners fare?
The company currently pays out 36.05% of its earnings as a dividend, according to its trailing twelve-month data, meaning the dividend is sufficiently covered by earnings. Going forward, analysts expect HCLP’s payout to increase to 110.80% of its earnings, which leads to a dividend yield of 10.51%. In addition to this, EPS should increase to $2.54. The higher payout forecasted, along with higher earnings, should lead to greater dividend income for investors moving forward. However this does bring about uncertainty around the sustainability of the payout ratio. If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. Unfortunately, it is really too early to view Hi-Crush Partners as a dividend investment. It has only been consistently paying dividends for 5 years, however, standard practice for reliable payers is to look for a 10-year minimum track record. In terms of its peers, Hi-Crush Partners produces a yield of 6.28%, which is high for Energy Services stocks.
Next Steps:
If Hi-Crush Partners is in your portfolio for cash-generating reasons, there may be better alternatives out there. However, if you are not strictly just a dividend investor, the stock could still offer some interesting investment opportunities. Given that this is purely a dividend analysis, I recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. There are three essential factors you should further examine:
Future Outlook: What are well-informed industry analysts predicting for HCLP’s future growth? Take a look at our free research report of analyst consensus for HCLP’s outlook.
Valuation: What is HCLP worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether HCLP is currently mispriced by the market.
Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
