Liberty Energy (NYSE:LBRT) Has Affirmed Its Dividend Of $0.08

The board of Liberty Energy Inc. (NYSE:LBRT) has announced that it will pay a dividend on the 20th of March, with investors receiving $0.08 per share. The dividend yield is 1.5% based on this payment, which is a little bit low compared to the other companies in the industry.

See our latest analysis for Liberty Energy

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

It would be nice for the yield to be higher, but we should also check if higher levels of dividend payment would be sustainable. However, prior to this announcement, Liberty Energy's dividend was comfortably covered by both cash flow and earnings. This means that most of its earnings are being retained to grow the business.

Over the next year, EPS is forecast to expand by 3.1%. If the dividend continues on this path, the payout ratio could be 15% by next year, which we think can be pretty sustainable going forward.

Liberty Energy's Dividend Has Lacked Consistency

It's comforting to see that Liberty Energy has been paying a dividend for a number of years now, however it has been cut at least once in that time. This makes us cautious about the consistency of the dividend over a full economic cycle. Since 2019, the annual payment back then was $0.20, compared to the most recent full-year payment of $0.32. This works out to be a compound annual growth rate (CAGR) of approximately 8.1% a year over that time. We have seen cuts in the past, so while the growth looks promising we would be a little bit cautious about its track record.

The Dividend Looks Likely To Grow

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. Liberty Energy has seen EPS rising for the last five years, at 17% per annum. Liberty Energy definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

Liberty Energy Looks Like A Great Dividend Stock

Overall, we like to see the dividend staying consistent, and we think Liberty Energy might even raise payments in the future. Earnings are easily covering distributions, and the company is generating plenty of cash. Taking this all into consideration, this looks like it could be a good dividend opportunity.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For example, we've identified 3 warning signs for Liberty Energy (1 is significant!) that you should be aware of before investing. Is Liberty Energy not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.