Granite Ridge Resources (NYSE:GRNT) Has Announced A Dividend Of $0.11

The board of Granite Ridge Resources, Inc. (NYSE:GRNT) has announced that it will pay a dividend of $0.11 per share on the 15th of December. This makes the dividend yield 8.5%, which will augment investor returns quite nicely.

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Granite Ridge Resources' Future Dividends May Potentially Be At Risk

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. Before this announcement, Granite Ridge Resources was paying out 153% of what it was earning, and not generating any free cash flows either. This high of a dividend payment could start to put pressure on the balance sheet in the future.

The next 12 months is set to see EPS grow by 55.2%. However, if the dividend continues along recent trends, it could start putting pressure on the balance sheet with the payout ratio reaching 99% over the next year.

Check out our latest analysis for Granite Ridge Resources

Granite Ridge Resources Doesn't Have A Long Payment History

The dividend has been pretty stable looking back, but the company hasn't been paying one for very long. This makes it tough to judge how it would fare through a full economic cycle. Since 2022, the annual payment back then was $0.32, compared to the most recent full-year payment of $0.44. This implies that the company grew its distributions at a yearly rate of about 11% over that duration. Granite Ridge Resources 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 Has Limited Growth Potential

The company's investors will be pleased to have been receiving dividend income for some time. However, things aren't all that rosy. Granite Ridge Resources' EPS has fallen by approximately 25% per year during the past five years. Dividend payments are likely to come under some pressure unless EPS can pull out of the nosedive it is in. On the bright side, earnings are predicted to gain some ground over the next year, but until this turns into a pattern we wouldn't be feeling too comfortable.

Granite Ridge Resources' Dividend Doesn't Look Great

Overall, while some might be pleased that the dividend wasn't cut, we think this may help Granite Ridge Resources make more consistent payments in the future. The company seems to be stretching itself a bit to make such big payments, but it doesn't appear they can be consistent over time. We don't think that this is a great candidate to be an income stock.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. To that end, Granite Ridge Resources has 4 warning signs (and 1 which is a bit concerning) we think you should know about. Is Granite Ridge Resources not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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