Global Water Resources (NASDAQ:GWRS) Has Affirmed Its Dividend Of $0.0253

The board of Global Water Resources, Inc. (NASDAQ:GWRS) has announced that it will pay a dividend on the 28th of February, with investors receiving $0.0253 per share. Based on this payment, the dividend yield will be 2.7%, which is fairly typical for the industry.

See our latest analysis for Global Water Resources

Global Water Resources' Payment Could Potentially Have Solid Earnings Coverage

While it is always good to see a solid dividend yield, we should also consider whether the payment is feasible. Before this announcement, Global Water Resources was paying out 113% of what it was earning, and not generating any free cash flows either. This high of a dividend payment could start to put pressure on the balance sheet in the future.

EPS is set to grow by 15.6% over the next year. If recent patterns in the dividend continues, the payout ratio in 12 months could be 85% which is a bit high but can definitely be sustainable.

Global Water Resources Doesn't Have A Long Payment History

Global Water Resources' dividend has been pretty stable for a little while now, but we will continue to be cautious until it has been demonstrated for a few more years. The dividend has gone from an annual total of $0.28 in 2016 to the most recent total annual payment of $0.304. Dividend payments have grown at less than 1% a year over this period. We like that the dividend hasn't been shrinking. However we're conscious that the company hasn't got an overly long track record of dividend payments yet, which makes us wary of relying on its dividend income.

Global Water Resources Might Find It Hard To Grow Its Dividend

Investors could be attracted to the stock based on the quality of its payment history. Global Water Resources has impressed us by growing EPS at 19% 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. Strong earnings growth means Global Water Resources has the potential to be a good dividend stock in the future, despite the current payments being at elevated levels. We would be a touch cautious of relying on this stock primarily for the dividend income.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For instance, we've picked out 3 warning signs for Global Water Resources that investors should take into consideration. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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