Shares of Helmerich and Payne
Investors in Helmerich and Payne, Inc. (NYSE:HP) should receive a payout of $0.25 per share on Dec. 1. This means that the annual payment will be 2.8% of the current share price, which is in line with the industry average.
Analysts expect significant growth in earnings per share next year. If the dividend remains in line with recent trends, we estimate the payout ratio to be 9.5%, so there is not too much pressure on the dividend.
Helmerich and Payne has a consistent track record of paying dividends with very few fluctuations. Since 2012, the annual payment then was $0.28 compared to the last full-year payment of $1. This means that during that time it has increased its distributions by 14 per cent per year.
Also, investors may be attracted to the stock based on the quality of its payment history. However, initial appearances can be deceptive. Helmerich and Payne's earnings per share seems to have declined about 46 per cent per year over the past five years. The sharp decline in earnings per share is not great from a dividend perspective. Even conservative payout ratios could come under pressure if earnings fall hard enough.
Nevertheless, earnings are projected to rise next year, but we will still be cautious until we can build a track record of earnings growth.
However, this company's stock pays a good dividend, even though the dividend has not been cut this year. Payments have been steady in the past, but we think the company is paying too much for that to continue in the long run.
The market movements demonstrate how much a consistent dividend policy is valued compared to a more unpredictable one. Meanwhile, while dividend payments are important, these are not the only factors our readers should be aware of when evaluating a company. For example, we've picked out 1 red flag for Helmerich and Payne that investors should take into account.