Q: the new WCP currently has a near 10% yield - red flag territory? What is the payout ratio based on current oil prices - and has WCP had to cut its dividend in the past?
Is insider ownership decent?
Is insider ownership decent?
5i Research Answer:
WCP lowered its monthly dividend in 2016 from 6.25 cents to 3.75 cents. In 2020 (pandemic) the dividend was lowered from 2.85 cents to 1.425 cents (it is now 6.08 cents). 12-month payout ratio is 25%. Adjusted for current prices likely 50%. With the VRN merger this may change to the upside. Insiders are 1.3% but have been net buyers this year. The current yield is really not out of line with others in the sector, as the sector has been very weak and sentiment is highly negative. This is reflected in the yield plus the very low valuation of 7X earnings.