Understanding APA Corp's Dividend Sustainability and Growth
APA Corp (APA, Financial) recently announced a dividend of $0.25 per share, payable on 2024-05-22, with the ex-dividend date set for 2024-04-19. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into APA Corp's dividend performance and assess its sustainability.
What Does APA Corp Do?
Based in Houston, APA Corp (APA, Financial) is an independent exploration and production company. It operates primarily in the US, Egypt, the North Sea, and Suriname. At year-end 2023, proved reserves totaled 807 million barrels of oil equivalent, with net reported production of 405 thousand boe/day that year (64% of which was oil and natural gas liquids, with the remainder natural gas).
A Glimpse at APA Corp's Dividend History
APA Corp has maintained a consistent dividend payment record since 1984. Dividends are currently distributed on a quarterly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down APA Corp's Dividend Yield and Growth
As of today, APA Corp currently has a 12-month trailing dividend yield of 3.09% and a 12-month forward dividend yield of 3.09%. This suggests an expectation of the same dividend payments over the next 12 months.
Over the past three years, APA Corp's annual dividend growth rate was 45.40%. Extended to a five-year horizon, this rate decreased to -6.30% per year. And over the past decade, APA Corp's annual dividends per share growth rate stands at -7.50%.
Based on APA Corp's dividend yield and five-year growth rate, the 5-year yield on cost of APA Corp stock as of today is approximately 2.23%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-12-31, APA Corp's dividend payout ratio is 0.25.
APA Corp's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks APA Corp's profitability 7 out of 10 as of 2023-12-31, suggesting good profitability prospects. The company has reported net profit in 5 years out of the past 10 years.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. APA Corp's growth rank of 7 out of 10 suggests that the company's growth trajectory is good relative to its competitors.
Revenue is the lifeblood of any company, and APA Corp's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. APA Corp's revenue has increased by approximately 31.70% per year on average, a rate that outperforms approximately 78.48% of global competitors.
Next Steps
Considering APA Corp's dividend payments, dividend growth rate, payout ratio, profitability, and growth metrics, investors can view the company as a contender for their portfolios, especially those seeking income through dividends. The consistent payment history, combined with a reasonable payout ratio and good growth prospects, positions APA Corp as a potentially attractive investment for dividend seekers. However, it's essential to keep an eye on the company's future performance and the energy sector's dynamics to ensure these dividends remain sustainable. Will APA Corp continue to provide a stable income stream for its shareholders? That's a question investors will need to monitor closely.
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This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
