North European Oil Royalty Trust (NYSE:NRT) Will Pay A Larger Dividend Than Last Year At US$0.14

By
Simply Wall St
Published
November 03, 2021
NYSE:NRT
Source: Shutterstock

North European Oil Royalty Trust's (NYSE:NRT) dividend will be increasing to US$0.14 on 24th of November. The announced payment will take the dividend yield to 5.2%, which is in line with the average for the industry.

See our latest analysis for North European Oil Royalty Trust

North European Oil Royalty Trust Is Paying Out More Than It Is Earning

We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue. Based on the last payment, the company wasn't making enough to cover what it was paying to shareholders. It will be difficult to sustain this level of payout so we wouldn't be confident about this continuing.

EPS is set to fall by 16.6% over the next 12 months if recent trends continue. If the dividend continues along recent trends, we estimate the payout ratio could reach 145%, which could put the dividend in jeopardy if the company's earnings don't improve.

historic-dividend
NYSE:NRT Historic Dividend November 4th 2021

Dividend Volatility

The company's dividend history has been marked by instability, with at least 1 cut in the last 10 years. Since 2011, the first annual payment was US$2.20, compared to the most recent full-year payment of US$0.47. The dividend has fallen 79% over that period. A company that decreases its dividend over time generally isn't what we are looking for.

Dividend Growth Potential Is Shaky

With a relatively unstable dividend, and a poor history of shrinking dividends, it's even more important to see if EPS is growing. Over the past five years, it looks as though North European Oil Royalty Trust's EPS has declined at around 17% a year. Dividend payments are likely to come under some pressure unless EPS can pull out of the nosedive it is in.

North European Oil Royalty Trust's Dividend Doesn't Look Great

Overall, while the dividend being raised can be good, there are some concerns about its long term sustainability. The company isn't making enough to be paying as much as it is, and the other factors don't look particularly promising either. The dividend doesn't inspire confidence that it will provide solid income in the future.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. However, there are other things to consider for investors when analysing stock performance. To that end, North European Oil Royalty Trust has 5 warning signs (and 1 which doesn't sit too well with us) we think you should know about. We have also put together a list of global stocks with a solid dividend.

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