Hemisphere Energy (CVE:HME) Has Announced A Dividend Of CA$0.025

The board of Hemisphere Energy Corporation (CVE:HME) has announced that it will pay a dividend of CA$0.025 per share on the 12th of September. This means the annual payment is 8.2% of the current stock price, which is above the average for the industry.

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Hemisphere Energy's Future Dividend Projections Appear Well Covered By Earnings

A big dividend yield for a few years doesn't mean much if it can't be sustained. However, Hemisphere Energy's earnings easily cover the dividend. As a result, a large proportion of what it earned was being reinvested back into the business.

Over the next year, EPS is forecast to fall by 27.9%. If recent patterns in the dividend continue, we could see the payout ratio reaching 78% in the next 12 months, which is on the higher end of the range we would say is sustainable.

See our latest analysis for Hemisphere Energy

Hemisphere Energy Is Still Building Its Track Record

Looking back, the dividend has been stable, but the company hasn't been paying a dividend for very long so we can't be confident that the dividend will remain stable through all economic environments. The dividend has gone from an annual total of CA$0.10 in 2022 to the most recent total annual payment of CA$0.16. This means that it has been growing its distributions at 17% per annum over that time. Hemisphere Energy has been growing its dividend quite rapidly, which is exciting. However, the short payment history makes us question whether this performance will persist across a full market cycle.

The Dividend Looks Likely To Grow

The company's investors will be pleased to have been receiving dividend income for some time. We are encouraged to see that Hemisphere Energy has grown earnings per share at 48% per year over the past five years. Earnings per share is growing at a solid clip, and the payout ratio is low which we think is an ideal combination in a dividend stock as the company can quite easily raise the dividend in the future.

Hemisphere Energy Looks Like A Great Dividend Stock

Overall, we like to see the dividend staying consistent, and we think Hemisphere Energy might even raise payments in the future. The earnings easily cover the company's distributions, and the company is generating plenty of cash. However, it is worth noting that the earnings are expected to fall over the next year, which may not change the long term outlook, but could affect the dividend payment in the next 12 months. All of these factors considered, we think this has solid potential as a dividend stock.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Taking the debate a bit further, we've identified 1 warning sign for Hemisphere Energy that investors need to be conscious of moving forward. Is Hemisphere Energy not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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