Targa Resources Corp's Dividend Analysis
A Detailed Look at the Dividend Performance and Sustainability of Targa Resources Corp (NYSE:TRGP)
Targa Resources Corp (NYSE:TRGP) recently announced a dividend of $0.5 per share, payable on 2023-11-15, with the ex-dividend date set for 2023-10-30. As investors anticipate this forthcoming payment, it also brings the company's dividend history, yield, and growth rates into focus. Using data from GuruFocus, we delve into Targa Resources Corp's dividend performance and assess its sustainability.
Understanding Targa Resources Corp's Operations
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Targa Resources is a midstream company that primarily operates gathering and processing assets with substantial positions in the Permian, Stack, Scoop, and Bakken plays. It has a gross fractionation capacity of 843,000 barrels per day at Mont Belvieu and operates a liquefied petroleum gas export terminal. The Grand Prix natural gas liquids pipeline recently entered full service.
A Review of Targa Resources Corp's Dividend History
Targa Resources Corp has maintained a consistent dividend payment record since 2011, with dividends currently distributed on a quarterly basis. The chart below shows the annual Dividends Per Share for tracking historical trends.
Analyzing Targa Resources Corp's Dividend Yield and Growth
As of today, Targa Resources Corp has a 12-month trailing dividend yield of 2.01% and a 12-month forward dividend yield of 2.37%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, Targa Resources Corp's annual dividend growth rate was -27.30%. Extended to a five-year horizon, this rate decreased to -30.00% per year. Over the past decade, Targa Resources Corp's annual dividends per share growth rate stands at -8.00%.
Based on Targa Resources Corp's dividend yield and five-year growth rate, the 5-year yield on cost of Targa Resources Corp stock as of today is approximately 0.34%.
Assessing Dividend Sustainability: Payout Ratio and Profitability
The dividend payout ratio can help us evaluate the sustainability of the dividend. This 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 2023-06-30, Targa Resources Corp's dividend payout ratio is 0.42.
Targa Resources Corp's profitability rank of 7 out of 10 as of 2023-06-30 suggests good profitability prospects. The company has reported net profit in 7 years out of the past 10 years.
Looking Ahead: Growth Metrics and Future Prospects
A company must have robust growth metrics to ensure the sustainability of dividends. Targa Resources Corp's growth rank of 7 out of 10 suggests that the company's growth trajectory is good relative to its competitors.
Revenue is the lifeblood of any company, and Targa Resources Corp's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Targa Resources Corp's revenue has increased by approximately 34.40% per year on average, a rate that outperforms approximately 86.23% of global competitors.
Concluding Thoughts
Despite a negative dividend growth rate over the past decade, Targa Resources Corp has maintained a consistent dividend payment record. Its dividend payout ratio and profitability rank suggest a sustainable dividend payment. The company's robust revenue growth and positive growth rank indicate a promising future, which could lead to improved dividend performance. However, investors should continue to monitor these metrics for any significant changes.
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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.
