Warrior Met Coal (NYSE:HCC) Is Paying Out A Larger Dividend Than Last Year
Warrior Met Coal, Inc.'s (NYSE:HCC) periodic dividend will be increasing on the 26th of February to $0.08, with investors receiving 14% more than last year's $0.07. Although the dividend is now higher, the yield is only 1.9%, which is below the industry average.
View our latest analysis for Warrior Met Coal
Warrior Met Coal's Earnings Easily Cover The Distributions
It would be nice for the yield to be higher, but we should also check if higher levels of dividend payment would be sustainable. Before making this announcement, Warrior Met Coal was easily earning enough to cover the dividend. As a result, a large proportion of what it earned was being reinvested back into the business.
Looking forward, earnings per share is forecast to rise by 1.3% over the next year. If the dividend continues along recent trends, we estimate the payout ratio will be 3.6%, which is in the range that makes us comfortable with the sustainability of the dividend.
Warrior Met Coal Is Still Building Its Track Record
It is great to see that Warrior Met Coal has been paying a stable dividend for a number of years now, however we want to be a bit cautious about whether this will remain true through a full economic cycle. Since 2017, the annual payment back then was $0.20, compared to the most recent full-year payment of $1.16. This means that it has been growing its distributions at 29% per annum over that time. We're not overly excited about the relatively short history of dividend payments, however the dividend is growing at a nice rate and we might take a closer look.
Dividend Growth May Be Hard To Achieve
The company's investors will be pleased to have been receiving dividend income for some time. However, Warrior Met Coal's EPS was effectively flat over the past five years, which could stop the company from paying more every year. Earnings growth is slow, but on the plus side, the dividend payout ratio is low and dividends could grow faster than earnings, if the company decides to increase its payout ratio.
Our Thoughts On Warrior Met Coal's Dividend
Overall, it's great to see the dividend being raised and that it is still in a sustainable range. The dividend has been at reasonable levels historically, but that hasn't translated into a consistent payment. This looks like it could be a good dividend stock going forward, but we would note that the payout ratio has been at higher levels in the past so it could happen again.
It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Case in point: We've spotted 2 warning signs for Warrior Met Coal (of which 1 shouldn't be ignored!) you should know about. 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.
