Stock Analysis

Primoris Services (NASDAQ:PRIM) Is Due To Pay A Dividend Of $0.06

  •  Updated
NasdaqGS:PRIM
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Primoris Services Corporation's (NASDAQ:PRIM) investors are due to receive a payment of $0.06 per share on 13th of January. This makes the dividend yield 1.1%, which will augment investor returns quite nicely.

Check out the opportunities and risks within the US Construction industry.

Primoris Services' Dividend Is Well Covered By Earnings

If the payments aren't sustainable, a high yield for a few years won't matter that much. Based on the last payment, Primoris Services was earning enough to cover the dividend, but free cash flows weren't positive. With the company not bringing in any cash, paying out to shareholders is bound to become difficult at some point.

The next year is set to see EPS grow by 45.7%. If the dividend continues along recent trends, we estimate the payout ratio will be 7.4%, which is in the range that makes us comfortable with the sustainability of the dividend.

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NasdaqGS:PRIM Historic Dividend November 12th 2022

Primoris Services Has A Solid Track Record

The company has an extended history of paying stable dividends. The annual payment during the last 10 years was $0.12 in 2012, and the most recent fiscal year payment was $0.24. This means that it has been growing its distributions at 7.2% per annum over that time. Dividends have grown at a reasonable rate over this period, and without any major cuts in the payment over time, we think this is an attractive combination as it provides a nice boost to shareholder returns.

The Dividend Looks Likely To Grow

The company's investors will be pleased to have been receiving dividend income for some time. Primoris Services has seen EPS rising for the last five years, at 13% per annum. With a decent amount of growth and a low payout ratio, we think this bodes well for Primoris Services' prospects of growing its dividend payments in the future.

Our Thoughts On Primoris Services' Dividend

Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. While Primoris Services is earning enough to cover the payments, the cash flows are lacking. We don't think Primoris Services is a great stock to add to your portfolio if income is your focus.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. However, there are other things to consider for investors when analysing stock performance. For example, we've picked out 1 warning sign for Primoris Services that investors should know about before committing capital to this stock. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

What are the risks and opportunities for Primoris Services?

Primoris Services Corporation, a specialty contractor company, provides a range of construction, fabrication, maintenance, replacement, and engineering services in the United States and Canada.

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Rewards

  • Price-To-Earnings ratio (11.5x) is below the US market (15.5x)

  • Earnings are forecast to grow 12.8% per year

  • Earnings have grown 14.3% per year over the past 5 years

Risks

  • Debt is not well covered by operating cash flow

  • Significant insider selling over the past 3 months

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