Global Water Resources (NASDAQ:GWRS) Will Pay A 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 31st of August. Based on this payment, the dividend yield will be 2.1%, which is fairly typical for the industry.

See our latest analysis for Global Water Resources

Global Water Resources Is Paying Out More Than It Is Earning

We like a dividend to be consistent over the long term, so checking whether it is sustainable is important. Before this announcement, Global Water Resources was paying out 142% of what it was earning, and not generating any free cash flows either. Paying out such a large dividend compared to earnings while also not generating any free cash flow would definitely be difficult to keep up.

Looking forward, earnings per share is forecast to fall by 2.0% over the next year. If the dividend continues along the path it has been on recently, the payout ratio in 12 months could be 109%, which is definitely a bit high to be sustainable going forward.

Global Water Resources Doesn't Have A Long Payment History

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 dividend has gone from an annual total of $0.28 in 2016 to the most recent total annual payment of $0.295. Dividend payments have grown at less than 1% a year over this period. 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.

The Dividend's Growth Prospects Are Limited

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Let's not jump to conclusions as things might not be as good as they appear on the surface. Over the past five years, it looks as though Global Water Resources' EPS has declined at around 3.8% a year. If the company is making less over time, it naturally follows that it will also have to pay out less in dividends.

We're Not Big Fans Of Global Water Resources' Dividend

Overall, this isn't a great candidate as an income investment, even though the dividend was stable this year. The company seems to be stretching itself a bit to make such big payments, but it doesn't appear they can be consistent over time. Overall, this doesn't get us very excited from an income standpoint.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Case in point: We've spotted 5 warning signs for Global Water Resources (of which 3 are significant!) you should know about. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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