Warrior Met Coal, Inc. (NYSE:HCC) Pays A US$0.50 Dividend In Just Four Days
Readers hoping to buy Warrior Met Coal, Inc. (NYSE:HCC) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. The ex-dividend date is one business day before the record date, which is the cut-off date for shareholders to be present on the company's books to be eligible for a dividend payment. 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. Meaning, you will need to purchase Warrior Met Coal's shares before the 29th of February to receive the dividend, which will be paid on the 7th of March.
The company's upcoming dividend is US$0.50 a share, following on from the last 12 months, when the company distributed a total of US$0.82 per share to shareholders. Calculating the last year's worth of payments shows that Warrior Met Coal has a trailing yield of 1.4% on the current share price of US$57.85. If you buy this business for its dividend, you should have an idea of whether Warrior Met Coal's dividend is reliable and sustainable. So we need to investigate whether Warrior Met Coal can afford its dividend, and if the dividend could grow.
See our latest analysis for Warrior Met Coal
Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. Warrior Met Coal has a low and conservative payout ratio of just 3.0% of its income after tax. Yet cash flow is typically more important than profit for assessing dividend sustainability, so we should always check if the company generated enough cash to afford its dividend. It distributed 29% of its free cash flow as dividends, a comfortable payout level for most companies.
It's positive to see that Warrior Met Coal'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.
Have Earnings And Dividends Been Growing?
Companies with falling earnings are riskier for dividend shareholders. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. Readers will understand then, why we're concerned to see Warrior Met Coal's earnings per share have dropped 7.0% a year over the past five years. When earnings per share fall, the maximum amount of dividends that can be paid also falls.
The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Since the start of our data, seven years ago, Warrior Met Coal has lifted its dividend by approximately 22% a year on average.
The Bottom Line
Is Warrior Met Coal an attractive dividend stock, or better left on the shelf? Earnings per share are down meaningfully, 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 needs to be cut. Overall, it's hard to get excited about Warrior Met Coal from a dividend perspective.
On that note, you'll want to research what risks Warrior Met Coal is facing. Every company has risks, and we've spotted 2 warning signs for Warrior Met Coal you should know about.
If you're in the market for strong dividend payers, we recommend checking our selection of top 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.
