NuStar Energy LP's Dividend Analysis
Assessing the Sustainability of NuStar Energy LP's Dividend Payments
NuStar Energy LP(NYSE:NS) recently announced a dividend of $0.4 per share, payable on 2024-02-13, with the ex-dividend date set for 2024-02-06. 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 look into NuStar Energy LP's dividend performance and assess its sustainability.
What Does NuStar Energy LP Do?
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NuStar Energy LP is a US-based pipeline and terminal operator. The company, along with its subsidiaries, is engaged in the transportation of petroleum products and anhydrous ammonia; the terminalling and storage of crude oil and specialty chemicals, and the marketing of petroleum products. Its business is organized into segments: Pipeline, Storage, and Fuels Marketing. Geographically, the company operates in the United States and abroad, deriving key revenue from the Pipeline business.
A Glimpse at NuStar Energy LP's Dividend History
NuStar Energy LP has maintained a consistent dividend payment record since 2001. Dividends are currently distributed on a quarterly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down NuStar Energy LP's Dividend Yield and Growth
As of today, NuStar Energy LP currently has a 12-month trailing dividend yield of 7.07% and a 12-month forward dividend yield of 7.07%. This suggests an expectation of the same dividend payments over the next 12 months.
Over the past three years, NuStar Energy LP's annual dividend growth rate was -12.60%. Extended to a five-year horizon, this rate decreased to -18.40% per year. And over the past decade, NuStar Energy LP's annual dividends per share growth rate stands at -11.40%.
Based on NuStar Energy LP's dividend yield and five-year growth rate, the 5-year yield on cost of NuStar Energy LP stock as of today is approximately 2.56%.
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 2023-09-30, NuStar Energy LP's dividend payout ratio is 2.89, which may suggest that the company's dividend may not be sustainable.
NuStar Energy LP's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks NuStar Energy LP's profitability 6 out of 10 as of 2023-09-30, suggesting fair profitability. The company has reported net profit in 6 years out of the past 10 years.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. NuStar Energy LP's growth rank of 6 out of 10 suggests that the company has a fair growth outlook.
Revenue is the lifeblood of any company, and NuStar Energy LP's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. NuStar Energy LP's revenue has increased by approximately 3.20% per year on average, a rate that underperforms approximately 65.61% 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, NuStar Energy LP's earnings increased by approximately 8.80% per year on average, a rate that underperforms approximately 64.17% of global competitors.
Considering the Dividend Outlook for NuStar Energy LP
While NuStar Energy LP has a history of consistent dividend payments, the declining dividend growth rate and the current payout ratio raise questions about the long-term sustainability of these payments. The company's fair profitability and growth metrics provide some reassurance, but investors should closely monitor these aspects. As the energy sector faces both opportunities and challenges, NuStar Energy LP's ability to maintain its dividend will likely depend on its strategic responses to market changes and its continued operational efficiency. For value investors seeking dividend income, it's crucial to weigh these factors against the attractive yield that NuStar Energy LP currently offers.
GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
This article first appeared on GuruFocus.
