Q: On Jan. 22 you wrote, "The 12-month payout ratio is 28%, and PEY is in good financial shape." On Feb. 14 you wrote, "BUT...its nine-month 2023 payout ratio was 101%. Its balance sheet is OK."
I am confused by these seemingly contradictory statements. Can you please clarify regarding the payout ratio and the health of the balance sheet?
It seems as if I am a bit of a sucker for high yields and have been burned by Birchcliff in 2023 (though still a holder), and do not want to suffer the same fate with my recent purchase of Peyto.
Thank you as always for your expertise.
I am confused by these seemingly contradictory statements. Can you please clarify regarding the payout ratio and the health of the balance sheet?
It seems as if I am a bit of a sucker for high yields and have been burned by Birchcliff in 2023 (though still a holder), and do not want to suffer the same fate with my recent purchase of Peyto.
Thank you as always for your expertise.
5i Research Answer:
With the first comment, we calculated the payout ratio ourselves as follows: 12-months to Sept 30 dividends were $188.5M. Operating cash flow was $671.6M, for a ratio of 28%. For the second comment, we took the company's stated payout ratio from its 3Q press release directly. In PEY's ratio it includes capital spending on plant and equipment so the ratio is much higher. Because much of this spending is optional (not all is) we generally like to use a ratio that compares dividends to actual operating cash flow alone. Both are 'right' ratios but with different calculations.