Petrus Resources' (TSE:PRQ) Dividend Will Be CA$0.01

The board of Petrus Resources Ltd. (TSE:PRQ) has announced that it will pay a dividend on the 31st of October, with investors receiving CA$0.01 per share. The dividend yield will be 6.9% based on this payment which is still above the industry average.

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Petrus Resources' Projections Indicate Future Payments May Be Unsustainable

A big dividend yield for a few years doesn't mean much if it can't be sustained. Based on the last payment, the company wasn't making enough to cover what it was paying to shareholders. This situation certainly isn't ideal, and could place significant strain on the balance sheet if it continues.

EPS is set to grow by 35.9% over the next year if recent trends continue. If the dividend continues on its recent course, the payout ratio in 12 months could be 135%, which is a bit high and could start applying pressure to the balance sheet.

View our latest analysis for Petrus Resources

Petrus Resources Is Still Building Its Track Record

The company has maintained a consistent dividend for a few years now, but we would like to see a longer track record before relying on it. There hasn't been much of a change in the dividend over the last 2 years. Petrus Resources hasn't been paying a dividend for very long, so we wouldn't get to excited about its record of growth just yet.

Petrus Resources Might Find It Hard To Grow Its Dividend

The company's investors will be pleased to have been receiving dividend income for some time. Petrus Resources has seen EPS rising for the last five years, at 36% per annum. Strong earnings is nice to see, but unless this can be sustained on minimal reinvestment of profits, we would question whether dividends will follow suit.

Petrus Resources' Dividend Doesn't Look Sustainable

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Petrus Resources' payments, as there could be some issues with sustaining them into the future. While we generally think the level of distributions are a bit high, we wouldn't rule it out as becoming a good dividend payer in the future as its earnings are growing healthily. We would probably look elsewhere for an income investment.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Just as an example, we've come across 3 warning signs for Petrus Resources you should be aware of, and 1 of them is concerning. Is Petrus Resources not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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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.