Global Water Resources (NASDAQ:GWRS) Has Affirmed Its Dividend Of US$0.025

Global Water Resources, Inc.'s (NASDAQ:GWRS) investors are due to receive a payment of US$0.025 per share on 31st of March. This means that the annual payment will be 1.9% of the current stock price, which is in line with the average for the industry.

Check out our latest analysis for Global Water Resources

Global Water Resources Doesn't Earn Enough To Cover Its Payments

We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue. Prior to this announcement, the company was paying out 219% of what it was earning. Without profits and cash flows increasing, it would be difficult for the company to continue paying the dividend at this level.

Earnings per share is forecast to rise by 18.5% over the next year. Assuming the dividend continues along recent trends, we think the payout ratio could reach 142%, which probably can't continue putting some pressure on the balance sheet.

Global Water Resources Is Still Building Its Track Record

It is great to see that Global Water Resources has been paying a stable dividend for a number of years now, however we want to be a bit cautious about whether this will remain true through a full economic cycle. The first annual payment during the last 6 years was US$0.28 in 2016, and the most recent fiscal year payment was US$0.29. Its dividends have grown at less than 1% per annum over this time frame. Modest dividend growth is good to see, especially with the payments being relatively stable. However, the payment history is relatively short and we wouldn't want to rely on this dividend too much.

Dividend Growth Could Be Constrained

The company's investors will be pleased to have been receiving dividend income for some time. Global Water Resources has impressed us by growing EPS at 10% per year over the past five years. However, the company isn't reinvesting a lot back into the business, so we would expect the growth rate to slow down somewhat in the future.

Global Water Resources' Dividend Doesn't Look Sustainable

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.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Case in point: We've spotted 3 warning signs for Global Water Resources (of which 1 makes us a bit uncomfortable!) you should know about. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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