Global Water Resources (NASDAQ:GWRS) Has Affirmed Its Dividend Of $0.0246

The board of Global Water Resources, Inc. (NASDAQ:GWRS) has announced that it will pay a dividend of $0.0246 per share on the 30th of November. Based on this payment, the dividend yield will be 2.4%, which is fairly typical for the industry.

Check out the opportunities and risks within the US Water Utilities industry.

Global Water Resources Is Paying Out More Than It Is Earning

Unless the payments are sustainable, the dividend yield doesn't mean too much. Based on the last payment, earnings were actually smaller than the dividend, and the company was actually spending more cash than it was making. Paying out such a large dividend compared to earnings while also not generating any free cash flow would definitely be difficult to keep up.

EPS is set to fall by 8.4% over the next 12 months. If the dividend continues along the path it has been on recently, the payout ratio in 12 months could be 121%, which is definitely a bit high to be sustainable going forward.

Global Water Resources Is Still Building Its Track Record

Even though the company has been paying a consistent dividend for a while, we would like to see a few more years before we feel comfortable relying on it. Since 2016, the dividend has gone from $0.28 total annually to $0.295. Its dividends have grown at less than 1% per annum over this time frame. It's good to see at least some dividend growth. Yet with a relatively short dividend paying history, we wouldn't want to depend on this dividend too heavily.

Dividend Growth Could Be Constrained

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. We are encouraged to see that Global Water Resources has grown earnings per share at 15% per year over the past five years. However, the payout ratio is very high, not leaving much room for growth of the dividend 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. We don't think Global Water Resources is a great stock to add to your portfolio if income is your focus.

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. For example, we've identified 4 warning signs for Global Water Resources (3 are significant!) that you should be aware of before investing. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

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