Alright, so here’s the thing. You know when you’re having a conversation about stocks, like the intense kind where charts are flying around? Usually, you’re just zeroing in on price action, right? I mean, that’s the bread and butter of stock talk. But today, oh man, we’re diving into something else entirely. So buckle up.
Picture this: you’re sipping your morning coffee, minding your own business, and bam! You see this chart. And it’s not just any chart—it’s like the Michelangelo of charts. Seriously, just stop and take it all in.
Okay, so what are we looking at? This bad boy is showing off the free cash flow for oil and gas giant Permian Resources (NYSE: PR). And trust me, it’s been on a wild ride. Over the past few years, it’s been on a growth spree. Like, they’re forecasting a 13% jump by 2025. Kind of makes you sit up and say, “Whoa.”
Now, let’s get into numbers. It’s got a 4.2% yield. But here’s the kicker: this free cash flow growth? It’s crucial for sizing up the safety of its dividend. Which — who doesn’t like a safe dividend, right?
So let’s break it down. Last year, they forked out $467 million in dividends. That’s a mere 35% payout ratio. Fast forward to this year, and dividends are set to skyrocket to $1 billion. If they hit that $1.5 billion free cash flow, that payout ratio will bump up to 66%. Totally within my comfort zone—I’ve got this thing where 75% or below feels cool for most companies.
Permian Resources? They’ve got a short, kind of twisty history with dividends. Only started paying them out in late 2022. They did this funky part-fixed, part-variable thing. Like, last year? They threw out a $0.06 fixed and $0.15 variable in Q2. Pretty wild, right?
But things took a turn in the latest quarter. They scrapped the variable bit and moved to a fixed $0.15 per share. Now, you might think, “Hey, from $0.21 to $0.15—isn’t that a cut?” and yeah, I see where you’re coming from. But variable dividends? They’re like catnip—always unpredictable. If they’d stuck with it, a cut would’ve been lurking around the corner for sure.
By settling into this fixed setup, they’re basically saying, “We got this.” It’s a confident move, expressing their trust in delivering a steady flow back to the folks holding onto shares.
Considering all this—the muscular free cash flow, a rock-solid payout ratio, and this newfangled dividend strategy? Honestly, the chances of them slashing the dividend are super slim.
So there it is. Dividend Safety Rating: A. But hey, what do you want me to dive into next? Throw your suggestions in the comments, and let’s keep this chat going. Cheers!
