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Shares of Permian Basin Royalty Trust (NYSE:PBT) will begin trading ex-dividend in 3 days. To qualify for the dividend check of $0.07 per share, investors must have owned the shares prior to 27 February 2018, which is the last day the company’s management will finalize their list of shareholders to which they will send dividend payments. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I examine Permian Basin Royalty Trust’s latest financial data to analyse its dividend characteristics. See our latest analysis for Permian Basin Royalty Trust
5 questions to ask before buying a dividend stock
If you are a dividend investor, you should always assess these five key metrics:
Is their annual yield among the top 25% of dividend payers?
Does it consistently pay out dividends without missing a payment of significantly cutting payout?
Has dividend per share amount increased over the past?
Is it able to pay the current rate of dividends from its earnings?
Will it have the ability to keep paying its dividends going forward?
Does Permian Basin Royalty Trust pass our checks?
Permian Basin Royalty Trust has a trailing twelve-month payout ratio of 100.33%, meaning the dividend is not sufficiently covered by its earnings. Furthermore, analysts have not forecasted a dividends per share for the future, which makes it hard to determine the yield shareholders should expect, and whether the current payout is sustainable, moving forward. If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. The reality facing PBT investors is that whilst it has continued to pay shareholders dividend, there has not been any increase in the level of dividends paid in the past decade. However, income investors that value stability over growth may still find PBT appealing. In terms of its peers, Permian Basin Royalty Trust generates a yield of 8.45%, which is high for Oil and Gas stocks.
If Permian Basin Royalty Trust is in your portfolio for cash-generating reasons, there may be better alternatives out there. But if you are not exclusively a dividend investor, the stock could still be an interesting investment opportunity. Given that this is purely a dividend analysis, you should always research extensively before deciding whether or not a stock is an appropriate investment for you. I always recommend analysing the company’s fundamentals and underlying business before making an investment decision. I’ve put together three key aspects you should further examine:
1. Valuation: What is PBT 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 PBT is currently mispriced by the market.
2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Permian Basin Royalty Trust’s board and the CEO’s back ground.
3. 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.