Is It Worth Considering Helmerich & Payne, Inc. (NYSE:HP) For Its Upcoming Dividend?
Helmerich & Payne, Inc. (NYSE:HP) stock is about to trade ex-dividend in 4 days. The ex-dividend date occurs one day before the record date which is the day on which shareholders need to be on the company's books in order to receive a dividend. The ex-dividend date is an important date to be aware of as any purchase of the stock made on or after this date might mean a late settlement that doesn't show on the record date. Meaning, you will need to purchase Helmerich & Payne's shares before the 16th of August to receive the dividend, which will be paid on the 31st of August.
The company's next dividend payment will be US$0.48 per share, and in the last 12 months, the company paid a total of US$1.71 per share. Looking at the last 12 months of distributions, Helmerich & Payne has a trailing yield of approximately 4.0% on its current stock price of $42.75. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! So we need to investigate whether Helmerich & Payne can afford its dividend, and if the dividend could grow.
Check out our latest analysis for Helmerich & Payne
Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. Fortunately Helmerich & Payne's payout ratio is modest, at just 26% of profit. A useful secondary check can be to evaluate whether Helmerich & Payne generated enough free cash flow to afford its dividend. It distributed 48% of its free cash flow as dividends, a comfortable payout level for most companies.
It's positive to see that Helmerich & Payne'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. With that in mind, we're discomforted by Helmerich & Payne's 5.0% per annum decline in earnings in the past five years. Ultimately, when earnings per share decline, the size of the pie from which dividends can be paid, shrinks.
Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. In the last 10 years, Helmerich & Payne has lifted its dividend by approximately 20% a year on average.
To Sum It Up
Should investors buy Helmerich & Payne for the upcoming dividend? Helmerich & Payne 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 Helmerich & Payne from a dividend perspective.
Curious what other investors think of Helmerich & Payne? See what analysts are forecasting, with this visualisation of its historical and future estimated earnings and cash flow.
Generally, we wouldn't recommend just buying the first dividend stock you see. Here's a curated list of interesting stocks that are strong dividend payers.
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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.
