The board of EOG Resources, Inc. (NYSE:EOG) has announced that it will pay a dividend on the 31st of January, with investors receiving $0.91 per share. This makes the dividend yield about the same as the industry average at 5.1%.
Check out our latest analysis for EOG Resources
EOG Resources’ Payment Has Solid Earnings Coverage
We like a dividend to be consistent over the long term, so checking whether it is sustainable is important. Before making this announcement, EOG Resources 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.
EPS is set to fall by 13.5% over the next 12 months. Assuming the dividend continues along recent trends, we believe the payout ratio could be 61%, which we are pretty comfortable with and we think is feasible on an earnings basis.
EOG Resources Has A Solid Track Record
The company has an extended history of paying stable dividends. The dividend has gone from an annual total of $0.375 in 2013 to the most recent total annual payment of $6.14. This means that it has been growing its distributions at 32% per annum over that time. It is good to see that there has been strong dividend growth, and that there haven’t been any cuts for a long time.
The Dividend Has Growth Potential
The company’s investors will be pleased to have been receiving dividend income for some time. EOG Resources has impressed us by growing EPS at 9.5% per year over the past five years. Growth in EPS bodes well for the dividend, as does the low payout ratio that the company is currently reporting.
EOG Resources Looks Like A Great Dividend Stock
In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. The earnings easily cover the company’s distributions, and the company is generating plenty of cash. We should point out that the earnings are expected to fall over the next 12 months, which won’t be a problem if this doesn’t become a trend, but could cause some turbulence in the next year. All in all, this checks a lot of the boxes we look for when choosing an income stock.
Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Taking the debate a bit further, we’ve identified 1 warning sign for EOG Resources that investors need to be conscious of moving forward. Is EOG Resources not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.
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Find out whether EOG Resources is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.
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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.
Read More: EOG Resources (NYSE:EOG) Will Pay A Dividend Of $0.91