U.S. Markets open in 28 mins
  • S&P Futures

    3,633.75
    +6.50 (+0.18%)
     
  • Dow Futures

    29,879.00
    +51.00 (+0.17%)
     
  • Nasdaq Futures

    12,191.25
    +39.00 (+0.32%)
     
  • Russell 2000 Futures

    1,842.20
    -2.40 (-0.13%)
     
  • Crude Oil

    45.30
    -0.41 (-0.90%)
     
  • Gold

    1,808.30
    -2.90 (-0.16%)
     
  • Silver

    23.23
    -0.22 (-0.94%)
     
  • EUR/USD

    1.1927
    +0.0014 (+0.1193%)
     
  • 10-Yr Bond

    0.8780
    -0.0040 (-0.45%)
     
  • Vix

    21.42
    -0.22 (-1.02%)
     
  • GBP/USD

    1.3325
    -0.0032 (-0.2385%)
     
  • USD/JPY

    104.1600
    -0.0900 (-0.0863%)
     
  • BTC-USD

    16,924.98
    -241.67 (-1.41%)
     
  • CMC Crypto 200

    330.88
    -39.63 (-10.70%)
     
  • FTSE 100

    6,334.18
    -28.75 (-0.45%)
     
  • Nikkei 225

    26,644.71
    +107.40 (+0.40%)
     

Scorpio Tankers Inc. (NYSE:STNG) Pays A US$0.10 Dividend In Just Four Days

Simply Wall St
·4 min read

Scorpio Tankers Inc. (NYSE:STNG) stock is about to trade ex-dividend in 4 days. Investors can purchase shares before the 8th of September in order to be eligible for this dividend, which will be paid on the 29th of September.

Scorpio Tankers's next dividend payment will be US$0.10 per share, on the back of last year when the company paid a total of US$0.40 to shareholders. Based on the last year's worth of payments, Scorpio Tankers stock has a trailing yield of around 3.6% on the current share price of $11.13. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. So we need to check whether the dividend payments are covered, and if earnings are growing.

See our latest analysis for Scorpio Tankers

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Scorpio Tankers paid out just 14% of its profit last year, which we think is conservatively low and leaves plenty of margin for unexpected circumstances. A useful secondary check can be to evaluate whether Scorpio Tankers generated enough free cash flow to afford its dividend. Luckily it paid out just 6.0% of its free cash flow last year.

It's positive to see that Scorpio Tankers's dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

historic-dividend
historic-dividend

Have Earnings And Dividends Been Growing?

Stocks with flat earnings can still be attractive dividend payers, but it is important to be more conservative with your approach and demand a greater margin for safety when it comes to dividend sustainability. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. With that in mind, we're not enthused to see that Scorpio Tankers's earnings per share have remained effectively flat over the past five years. Better than seeing them fall off a cliff, for sure, but the best dividend stocks grow their earnings meaningfully over the long run.

Scorpio Tankers also issued more than 5% of its market cap in new stock during the past year, which we feel is likely to hurt its dividend prospects in the long run. It's hard to grow dividends per share when a company keeps creating new shares.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Scorpio Tankers's dividend payments per share have declined at 36% per year on average over the past 10 years, which is uninspiring.

Final Takeaway

From a dividend perspective, should investors buy or avoid Scorpio Tankers? Earnings per share have been flat, although at least the company is paying out a low and conservative percentage of both its earnings and cash flow. It's definitely not great to see earnings falling, but at least there may be some buffer before the dividend gets cut. Overall, it's hard to get excited about Scorpio Tankers from a dividend perspective.

So while Scorpio Tankers looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. For example, Scorpio Tankers has 5 warning signs (and 2 which shouldn't be ignored) we think you should know about.

If you're in the market for dividend stocks, we recommend checking our list of top dividend stocks with a greater than 2% yield and an upcoming dividend.

This article by Simply Wall St is general in nature. 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.