Kinetik Holdings (NYSE:KNTK) Is Paying Out A Dividend Of $0.75

The board of Kinetik Holdings Inc. (NYSE:KNTK) has announced that it will pay a dividend of $0.75 per share on the 22nd of November. The dividend yield will be 8.2% based on this payment which is still above the industry average.

Check out our latest analysis for Kinetik Holdings

Kinetik Holdings Doesn't Earn Enough To Cover Its Payments

A big dividend yield for a few years doesn't mean much if it can't be sustained. Prior to this announcement, the company was paying out 191% of what it was earning. This situation certainly isn't ideal, and could place significant strain on the balance sheet if it continues.

The next 12 months is set to see EPS grow by 76.7%. Assuming the dividend continues along recent trends, we think the payout ratio could reach 127%, which probably can't continue without putting some pressure on the balance sheet.

Kinetik Holdings Doesn't Have A Long Payment History

It is tough to make a judgement on how stable a dividend is when the company hasn't been paying one for very long. This doesn't mean that the company can't pay a good dividend, but just that we want to wait until it can prove itself.

Kinetik Holdings Might Find It Hard To Grow Its Dividend

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Kinetik Holdings will be very happy to have seen its EPS grow by 1,217% in just the last 12 months. We're glad to see EPS up on last year, but we're conscious that growth rates typically slow as companies increase in size. EPS has been growing well, but Kinetik Holdings has been paying out a massive proportion of its earnings, which can make the dividend tough to maintain. However, we would never make any decisions based on only a single year of data, especially when assessing long term dividend potential.

The Dividend Could Prove To Be Unreliable

Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. In general, the distributions are a little bit higher than we would like, but we can't ignore the fact the quickly growing earnings gives this stock great potential in the future. This company is not in the top tier of income providing stocks.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. However, there are other things to consider for investors when analysing stock performance. To that end, Kinetik Holdings has 3 warning signs (and 2 which don't sit too well with us) we think you should know about. Is Kinetik Holdings 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.