W&T Offshore, Inc. (NYSE:WTI) Pays A US$0.01 Dividend In Just Four Days
Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see W&T Offshore, Inc. (NYSE:WTI) is about to trade ex-dividend in the next 4 days. The ex-dividend date is one business day before a company's record date, which is the date on which the company determines which shareholders are entitled to receive a dividend. The ex-dividend date is important because any transaction on a stock needs to have been settled before the record date in order to be eligible for a dividend. Therefore, if you purchase W&T Offshore's shares on or after the 15th of March, you won't be eligible to receive the dividend, when it is paid on the 25th of March.
The company's next dividend payment will be US$0.01 per share, on the back of last year when the company paid a total of US$0.04 to shareholders. Based on the last year's worth of payments, W&T Offshore stock has a trailing yield of around 1.6% on the current share price of US$2.58. If you buy this business for its dividend, you should have an idea of whether W&T Offshore's dividend is reliable and sustainable. So we need to check whether the dividend payments are covered, and if earnings are growing.
View our latest analysis for W&T Offshore
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. W&T Offshore is paying out just 9.4% of its profit after tax, which is comfortably low and leaves plenty of breathing room in the case of adverse events. A useful secondary check can be to evaluate whether W&T Offshore generated enough free cash flow to afford its dividend. The good news is it paid out just 4.3% of its free cash flow in the last year.
It's encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don't drop precipitously.
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Businesses with shrinking earnings are tricky from a dividend perspective. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. W&T Offshore's earnings per share have plummeted approximately 43% a year over the previous five years.
Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. W&T Offshore has seen its dividend decline 29% per annum on average over the past 10 years, which is not great to see. It's never nice to see earnings and dividends falling, but at least management has cut the dividend rather than potentially risk the company's health in an attempt to maintain it.
The Bottom Line
Is W&T Offshore an attractive dividend stock, or better left on the shelf? W&T Offshore has comfortably low cash and profit payout ratios, which may mean the dividend is sustainable even in the face of a sharp decline in earnings per share. Still, we consider declining earnings to be a warning sign. In summary, it's hard to get excited about W&T Offshore from a dividend perspective.
While it's tempting to invest in W&T Offshore for the dividends alone, you should always be mindful of the risks involved. To that end, you should learn about the 3 warning signs we've spotted with W&T Offshore (including 1 which can't be ignored).
A common investing mistake is buying the first interesting stock you see. Here you can find a full list of high-yield dividend stocks.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.
