Is Permian Basin Royalty Trust (NYSE:PBT) A Good Dividend Stock?
A large part of investment returns can be generated by dividend-paying stock given their role in compounding returns over time. Permian Basin Royalty Trust (NYSE:PBT) has returned to shareholders over the past 10 years, an average dividend yield of 7.00% annually. Let’s dig deeper into whether Permian Basin Royalty Trust should have a place in your portfolio. View our latest analysis for Permian Basin Royalty Trust
How I analyze a dividend stock
When researching a dividend stock, I always follow the following screening criteria:
Does it pay an annual yield higher than 75% of dividend payers?
Has it paid dividend every year without dramatically reducing payout in the past?
Has dividend per share amount increased over the past?
Does earnings amply cover its dividend payments?
Based on future earnings growth, will it be able to continue to payout dividend at the current rate?
How does Permian Basin Royalty Trust fare?
The company currently pays out 100.33% of its earnings as a dividend, according to its trailing twelve-month data, which means that the dividend is not well-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. PBT investors will be well aware there has not been any increase in the dividend payments over the last 10 years, although the payments have at least been steady. However, income investors that value stability over growth may still find PBT appealing. In terms of its peers, Permian Basin Royalty Trust has a yield of 7.72%, which is high for Oil and Gas stocks.
Next Steps:
If you are building an income portfolio, then Permian Basin Royalty Trust is a complicated choice since it has some positive aspects as well as negative ones. 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. I’ve put together three essential factors you should further research:
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.
