We Wouldn't Be Too Quick To Buy BP Prudhoe Bay Royalty Trust (NYSE:BPT) Before It Goes Ex-Dividend
BP Prudhoe Bay Royalty Trust (NYSE:BPT) is about to trade ex-dividend in the next 3 days. The ex-dividend date is usually set to be one business day before the record date which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the dividend. The ex-dividend date is important as the process of settlement involves two full business days. So if you miss that date, you would not show up on the company's books on the record date. Thus, you can purchase BP Prudhoe Bay Royalty Trust's shares before the 14th of October in order to receive the dividend, which the company will pay on the 20th of October.
The company's next dividend payment will be US$0.069 per share, and in the last 12 months, the company paid a total of US$0.097 per share. Based on the last year's worth of payments, BP Prudhoe Bay Royalty Trust stock has a trailing yield of around 7.1% on the current share price of $3.89. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. So we need to check whether the dividend payments are covered, and if earnings are growing.
Check out our latest analysis for BP Prudhoe Bay Royalty Trust
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. BP Prudhoe Bay Royalty Trust reported a loss last year, so it's not great to see that it has continued paying a dividend.
Click here to see how much of its profit BP Prudhoe Bay Royalty Trust paid out over the last 12 months.
Have Earnings And Dividends Been Growing?
Businesses with shrinking earnings are tricky from a dividend perspective. If earnings fall far enough, the company could be forced to cut its dividend. BP Prudhoe Bay Royalty Trust was unprofitable last year and, unfortunately, the general trend suggests its earnings have been in decline over the last five years, making us wonder if the dividend is sustainable at all.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. BP Prudhoe Bay Royalty Trust 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.
We update our analysis on BP Prudhoe Bay Royalty Trust every 24 hours, so you can always get the latest insights on its financial health, here.
Final Takeaway
From a dividend perspective, should investors buy or avoid BP Prudhoe Bay Royalty Trust? This is not an overtly appealing combination of characteristics, and we're just not that interested in this company's dividend.
Although, if you're still interested in BP Prudhoe Bay Royalty Trust and want to know more, you'll find it very useful to know what risks this stock faces. To help with this, we've discovered 6 warning signs for BP Prudhoe Bay Royalty Trust (2 shouldn't be ignored!) that you ought to be aware of before buying the shares.
A common investment mistake is buying the first interesting stock you see. Here you can find a list of promising dividend stocks with a greater than 2% yield and an upcoming dividend.
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.
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