Matador Resources (NYSE:MTDR) Is Increasing Its Dividend To $0.15

Matador Resources Company (NYSE:MTDR) will increase its dividend from last year's comparable payment on the 1st of June to $0.15. Despite this raise, the dividend yield of 1.3% is only a modest boost to shareholder returns.

See our latest analysis for Matador Resources

Matador Resources' Payment Has Solid Earnings Coverage

If it is predictable over a long period, even low dividend yields can be attractive. Before making this announcement, Matador Resources was easily earning enough to cover the dividend. This means that most of its earnings are being retained to grow the business.

The next year is set to see EPS grow by 4.7%. If the dividend continues along recent trends, we estimate the payout ratio will be 4.9%, which is in the range that makes us comfortable with the sustainability of the dividend.

Matador Resources Doesn't Have A Long Payment History

The company has maintained a consistent dividend for a few years now, but we would like to see a longer track record before relying on it. Since 2021, the annual payment back then was $0.10, compared to the most recent full-year payment of $0.60. This implies that the company grew its distributions at a yearly rate of about 145% over that duration. Matador 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 Looks Likely To Grow

Investors could be attracted to the stock based on the quality of its payment history. We are encouraged to see that Matador Resources has grown earnings per share at 49% per year over the past five years. Rapid earnings growth and a low payout ratio suggest this company has been effectively reinvesting in its business. Should that continue, this company could have a bright future.

Matador Resources Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that Matador Resources is a strong income stock thanks to its track record and growing earnings. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All of these factors considered, we think this has solid potential as a dividend stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Earnings growth generally bodes well for the future value of company dividend payments. See if the 6 Matador Resources analysts we track are forecasting continued growth with our free report on analyst estimates for the company. Is Matador Resources not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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