Warrior Met Coal (NYSE:HCC) Will Pay A Larger Dividend Than Last Year At $0.07
Warrior Met Coal, Inc. (NYSE:HCC) has announced that it will be increasing its dividend from last year's comparable payment on the 14th of August to $0.07. Based on this payment, the dividend yield for the company will be 2.7%, which is fairly typical for the industry.
View our latest analysis for Warrior Met Coal
Warrior Met Coal's Earnings Easily Cover The Distributions
While it is always good to see a solid dividend yield, we should also consider whether the payment is feasible. However, prior to this announcement, Warrior Met Coal's dividend was comfortably covered by both cash flow and earnings. This means that most of its earnings are being retained to grow the business.
Over the next year, EPS is forecast to fall by 63.5%. If the dividend continues along the path it has been on recently, we estimate the payout ratio could be 44%, which is comfortable for the company to continue in the future.
Warrior Met Coal Is Still Building Its Track Record
Even though the company has been paying a consistent dividend for a while, we would like to see a few more years before we feel comfortable relying on it. The annual payment during the last 6 years was $0.20 in 2017, and the most recent fiscal year payment was $1.16. This works out to be a compound annual growth rate (CAGR) of approximately 34% a year over that time. The dividend has been growing rapidly, however with such a short payment history we can't know for sure if payment can continue to grow over the long term, so caution may be warranted.
We Could See Warrior Met Coal's Dividend Growing
Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Warrior Met Coal has impressed us by growing EPS at 5.6% per year over the past five years. Growth in EPS bodes well for the dividend, as does the low payout ratio that the company is currently reporting.
Our Thoughts On Warrior Met Coal's Dividend
In summary, it's great to see that the company can raise the dividend and keep it in a sustainable range. The payout ratio looks good, but unfortunately the company's dividend track record isn't stellar. Taking all of this into consideration, the dividend looks viable moving forward, but investors should be mindful that the company has pushed the boundaries of sustainability in the past and may do so again.
Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For example, we've identified 2 warning signs for Warrior Met Coal (1 is significant!) that you should be aware of before investing. Is Warrior Met Coal not quite the opportunity you were looking for? Why not check out 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.
