Is Buying Whitecap Resources Inc (TSE:WCP) For Its Upcoming $0.03 Dividend A Good Choice?

On the 15 May 2018, Whitecap Resources Inc (TSX:WCP) will be paying shareholders an upcoming dividend amount of CA$0.03 per share. However, investors must have bought the company’s stock before 27 April 2018 in order to qualify for the payment. That means you have only 3 days left! Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I take a deeper dive into Whitecap Resources’s latest financial data to analyse its dividend attributes. Check out our latest analysis for Whitecap Resources

5 checks you should do on a dividend stock

When researching a dividend stock, I always follow the following screening criteria:

  • Is their annual yield among the top 25% of dividend payers?
  • Does it consistently pay out dividends without missing a payment of significantly cutting payout?
  • Has it increased its dividend per share amount over the past?
  • Is is able to pay the current rate of dividends from its earnings?
  • Will it have the ability to keep paying its dividends going forward?

TSX:WCP Historical Dividend Yield Apr 23rd 18
TSX:WCP Historical Dividend Yield Apr 23rd 18

Does Whitecap Resources pass our checks?

Whitecap Resources has a negative payout ratio, meaning that the company is not yet profitable and is paying dividend by dipping into its retained earnings. If dividend is a key criteria in your investment consideration, then you need to make sure the dividend stock you’re eyeing out is reliable in its payments. Unfortunately, it is really too early to view Whitecap Resources as a dividend investment. It has only been consistently paying dividends for 5 years, however, standard practice for reliable payers is to look for a 10-year minimum track record. In terms of its peers, Whitecap Resources generates a yield of 3.30%, which is on the low-side for Oil and Gas stocks.

Next Steps:

Now you know to keep in mind the reason why investors should be careful investing in Whitecap Resources for the dividend. On the other hand, if you are not strictly just a dividend investor, the stock could still be offering some interesting investment opportunities. Given that this is purely a dividend analysis, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. I’ve put together three pertinent aspects you should further examine:

  1. Future Outlook: What are well-informed industry analysts predicting for WCP’s future growth? Take a look at our free research report of analyst consensus for WCP’s outlook.
  2. Valuation: What is WCP worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether WCP is currently mispriced by the market.
  3. Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.