SM Energy Co's Dividend Analysis
Understanding the Dividend Potential of SM Energy Co
SM Energy Co (NYSE:SM) recently announced a dividend of $0.18 per share, payable on 2024-02-05, with the ex-dividend date set for 2024-01-18. 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 SM Energy Co's dividend performance and assess its sustainability.
What Does SM Energy Co Do?
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SM Energy Co is an independent energy company engaged in the acquisition, exploration, development, and production of crude oil and condensate, natural gas, and natural gas liquids. Operating primarily out of the United States, the company actively participates in joint ventures, prospects/leaseholds, and drill-to-earn opportunities. The majority of the company's revenue is derived from some of the United States' premier drilling locations. Drilling location interests have been traditionally obtained through oil and gas leases from third parties. SM Energy relies on its fleet of geologists, geophysicists, landmen, and engineers to help extract the full potential out of all properties held.
A Glimpse at SM Energy Co's Dividend History
SM Energy Co has maintained a consistent dividend payment record since 1993. Dividends are currently distributed on a quarterly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down SM Energy Co's Dividend Yield and Growth
As of today, SM Energy Co currently has a 12-month trailing dividend yield of 1.60% and a 12-month forward dividend yield of 1.96%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, SM Energy Co's annual dividend growth rate was 17.00%. Extended to a five-year horizon, this rate decreased to -11.00% per year. And over the past decade, SM Energy Co's annual dividends per share growth rate stands at -7.80%.
Based on SM Energy Co's dividend yield and five-year growth rate, the 5-year yield on cost of SM Energy Co stock as of today is approximately 0.89%.
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, SM Energy Co's dividend payout ratio is 0.09.
SM Energy Co's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks SM Energy Co's profitability 6 out of 10 as of 2023-09-30, suggesting fair profitability. The company has reported net profit in 5 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. SM Energy Co'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 SM Energy Co's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. SM Energy Co's revenue has increased by approximately 24.20% per year on average, a rate that outperforms approximately 75.15% of global competitors.
Concluding Thoughts on SM Energy Co's Dividend Profile
SM Energy Co's commitment to regular dividend payments, alongside a moderate yield and growth prospects, presents an interesting case for investors. The company's prudent payout ratio and fair profitability rank indicate a balanced approach to rewarding shareholders while maintaining sufficient capital for operations and investments. With a solid track record of revenue growth, SM Energy Co appears positioned to sustain its dividend distributions. However, investors should continuously monitor the energy sector's dynamics, regulatory changes, and SM Energy Co's operational performance to gauge the long-term viability of its dividend policy. For those seeking to expand their portfolio with dividend-paying stocks, 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.
