Q: Hello 5i team,
Gibson Energy's yield is currently nearing 7%, quite tempting for a dividend investor. Can I get your opinion on the sustainability of this dividend? What is the payout ratio based on earnings and cash flow? I already have positions in ENB, TRP, PPL, KEY and ALA. Would taking a position in GEI reduce my risk, or would I be better off topping up the other positions?
Many thanks for your valuable advice!
Brian
Gibson Energy's yield is currently nearing 7%, quite tempting for a dividend investor. Can I get your opinion on the sustainability of this dividend? What is the payout ratio based on earnings and cash flow? I already have positions in ENB, TRP, PPL, KEY and ALA. Would taking a position in GEI reduce my risk, or would I be better off topping up the other positions?
Many thanks for your valuable advice!
Brian
5i Research Answer:
Payout on earnings is 124%. On cash flow 57%. Debt is still very high, which adds risks, but we would not view the dividend as in jeopardy. The dividend was last raised in February. While we consider it OK for income, we would not see it as reducing portfolio risk on the current companies noted in the question. We would prefer the others, with ENB preferred overall.