Why You Might Be Interested In Alpha Metallurgical Resources, Inc. (NYSE:AMR) For Its Upcoming Dividend

Jan 27, 2024

Stock Analysis

Readers hoping to buy Alpha Metallurgical Resources, Inc. (NYSE:AMR) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. The ex-dividend date is usually set to be one business day before the record date which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the dividend. It is important to be aware of the ex-dividend date because any trade on the stock needs to have been settled on or before the record date. Therefore, if you purchase Alpha Metallurgical Resources' shares on or after the 14th of June, you won't be eligible to receive the dividend, when it is paid on the 5th of July.

The company's next dividend payment will be US$0.50 per share, on the back of last year when the company paid a total of US$1.76 to shareholders. Last year's total dividend payments show that Alpha Metallurgical Resources has a trailing yield of 1.3% on the current share price of $148.45. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! So we need to check whether the dividend payments are covered, and if earnings are growing.

View our latest analysis for Alpha Metallurgical Resources

Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. Alpha Metallurgical Resources is paying out just 2.1% of its profit after tax, which is comfortably low and leaves plenty of breathing room in the case of adverse events. That said, even highly profitable companies sometimes might not generate enough cash to pay the dividend, which is why we should always check if the dividend is covered by cash flow. Luckily it paid out just 8.9% of its free cash flow last year.

It's positive to see that Alpha Metallurgical Resources's dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. That's why it's comforting to see Alpha Metallurgical Resources's earnings have been skyrocketing, up 40% per annum for the past five years. With earnings per share growing rapidly and the company sensibly reinvesting almost all of its profits within the business, Alpha Metallurgical Resources looks like a promising growth company.

Unfortunately Alpha Metallurgical Resources has only been paying a dividend for a year or so, so there's not much of a history to draw insight from.

Is Alpha Metallurgical Resources an attractive dividend stock, or better left on the shelf? We love that Alpha Metallurgical Resources is growing earnings per share while simultaneously paying out a low percentage of both its earnings and cash flow. These characteristics suggest the company is reinvesting in growing its business, while the conservative payout ratio also implies a reduced risk of the dividend being cut in the future. It's a promising combination that should mark this company worthy of closer attention.

On that note, you'll want to research what risks Alpha Metallurgical Resources is facing. Our analysis shows 1 warning sign for Alpha Metallurgical Resources and you should be aware of this before buying any shares.

A common investing mistake is buying the first interesting stock you see. Here you can find a full list of high-yield dividend stocks.

What are the risks and opportunities for Alpha Metallurgical Resources?

NYSE:AMR

Alpha Metallurgical Resources

Alpha Metallurgical Resources, Inc., a mining company, produces, processes, and sells met and thermal coal in Virginia and West Virginia.Show more

Rewards

Trading at 68.9% below our estimate of its fair value

Earnings grew by 82.5% over the past year

Risks

Earnings are forecast to decline by an average of 68.3% per year for the next 3 years

Share Price

Market Cap

1Y Return

Further research onAlpha Metallurgical Resources

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Alpha Metallurgical Resources, Inc., a mining company, produces, processes, and sells met and thermal coal in Virginia and West Virginia.

Flawless balance sheet with outstanding track record.