Yahoo Finance Tourmaline Oil's (TSE:TOU) Dividend Will Be CA$0.32
Tourmaline Oil Corp. (TSE:TOU) will pay a dividend of CA$0.32 on the 28th of June. This takes the dividend yield to 7.7%, which shareholders will be pleased with.
View our latest analysis for Tourmaline Oil
Tourmaline Oil's Earnings Easily Cover The Distributions
Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. Based on the last payment, Tourmaline Oil was paying only paying out a fraction of earnings, but the payment was a massive 125% of cash flows. While the business may be attempting to set a balanced dividend policy, a cash payout ratio this high might expose the dividend to being cut if the business ran into some challenges.
The next year is set to see EPS grow by 66.7%. If the dividend continues on this path, the payout ratio could be 63% by next year, which we think can be pretty sustainable going forward.
Tourmaline Oil's Dividend Has Lacked Consistency
It's comforting to see that Tourmaline Oil has been paying a dividend for a number of years now, however it has been cut at least once in that time. Due to this, we are a little bit cautious about the dividend consistency over a full economic cycle. The annual payment during the last 6 years was CA$0.32 in 2018, and the most recent fiscal year payment was CA$5.20. This works out to be a compound annual growth rate (CAGR) of approximately 59% a year over that time. Tourmaline Oil has grown distributions at a rapid rate despite cutting the dividend at least once in the past. Companies that cut once often cut again, so we would be cautious about buying this stock solely for the dividend income.
The Dividend Looks Likely To Grow
With a relatively unstable dividend, it's even more important to evaluate if earnings per share is growing, which could point to a growing dividend in the future. It's encouraging to see that Tourmaline Oil has been growing its earnings per share at 30% a year over the past five years. Rapid earnings growth and a low payout ratio suggest this company has been effectively reinvesting in its business. Should that continue, this company could have a bright future.
Our Thoughts On Tourmaline Oil's Dividend
Overall, we always like to see the dividend being raised, but we don't think Tourmaline Oil will make a great income stock. While the low payout ratio is a redeeming feature, this is offset by the minimal cash to cover the payments. We would be a touch cautious of relying on this stock primarily for the dividend income.
Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. However, there are other things to consider for investors when analysing stock performance. For instance, we've picked out 3 warning signs for Tourmaline Oil that investors should take into consideration. Looking for more high-yielding dividend ideas? Try our collection of 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.
