Q: Good afternoon,
In recent commentary, it was noted that the payout ratio is 30%- the current div is $1.32, eps $1.62(?) - trying to square what seems to be a higher div payout ratio than .30.
Thank you in advance for your help,
In recent commentary, it was noted that the payout ratio is 30%- the current div is $1.32, eps $1.62(?) - trying to square what seems to be a higher div payout ratio than .30.
Thank you in advance for your help,
5i Research Answer:
In the oil and gas business there are significant charges to earnings, such as depletion (of reserves) and depreciation. But these are non-cash charges. For this reason, we find it more constructive to look at cash flow payout ratios rather than earnings. After all cash, not earnings, is what is needed to pay dividends. So the ratio we quote most often is the operating cash flow payout ratio.