April 25, 2025 a 11:31 am
FANG: Dividend Analysis - Diamondback Energy, Inc.
Diamondback Energy, Inc. presents a compelling dividend profile with a yield of 4.44% and a consistent history of 8 years of dividend payments. Although the payout ratio suggests a cautious approach due to high EPS payout, the company shows promise with moderate dividend growth over the past years.
📊 Overview
Diamondback Energy, operating in the energy sector, offers investors a dividend yield of approximately 4.44%. This is a significant point of interest for income-focused investors. The company's commitment to returning value is evident through its current dividend per share of USD 7.39. The consistent dividend history spans 8 years, although it raises concerns with a notable payout ratio and the last cut or suspension remains unrecorded.
| Metric | Value |
|---|---|
| Sector | Energy |
| Dividend Yield | 4.44% |
| Current Dividend per Share | 7.39 USD |
| Dividend History | 8 years |
| Last Cut/Suspension | None |
📈 Dividend History
The dividend history is a critical indicator of a company's financial stability and investor friendliness. A consistent or growing dividend with minimal cuts reflects well on management's commitment to shareholders.
| Year | Dividend per Share |
|---|---|
| 2025 | 1.00 |
| 2024 | 8.29 |
| 2023 | 7.99 |
| 2022 | 8.96 |
| 2021 | 1.75 |
📈 Dividend Growth
This section outlines the dividend growth pattern over recent years, signifying potential future increases. Such growth can drive long-term total returns for shareholders.
| Time | Growth |
|---|---|
| 3 years | 0.68% |
| 5 years | 0.65% |
The average dividend growth is 0.65% over 5 years. This shows moderate but steady dividend growth, indicating a stable return for dedicated investors.
📉 Payout Ratio
Understanding the payout ratio helps assess the sustainability of dividends relative to earnings or free cash flow. A lower ratio suggests a greater buffer for payouts, even if earnings decline.
| Key Figure Ratio | Value |
|---|---|
| EPS-based | 64.61% |
| Free Cash Flow-based | -42.03% |
A payout ratio of 64.61% of EPS indicates a cautious distribution approach, but the negative free cash flow payout suggests potential difficulties in sustaining these dividends without affecting liquidity.
Cashflow & Capital Efficiency
Evaluating cash flow and capital efficiencies such as Free Cash Flow Yield and CAPEX/Opex ratios gives insights into the company's financial health and capacity to fund dividends and operations.
| Year | 2024 | 2023 | 2022 |
|---|---|---|---|
| Free Cash Flow Yield | 10.14% | 4.32% | 11.68% |
| Earnings Yield | 9.54% | 11.26% | 18.16% |
| CAPEX to Operating Cash Flow | 44.71% | 79.63% | 55.42% |
| Stock-based Compensation to Revenue | 0.59% | 0.64% | 0.57% |
| Free Cash Flow / Operating Cash Flow Ratio | 55.29% | 20.37% | 44.58% |
Diamondback Energy exhibits robust capital efficiency metrics, although the discrepancies in free cash flows indicate potential challenges in ensuring dividend coverage during volatile market conditions.
Balance Sheet & Leverage Analysis
A thorough understanding of leverage and liquidity metrics such as Debt-to-Equity and Current Ratios is imperative for evaluating financial health and resilience against economic uncertainties.
| Year | 2024 | 2023 | 2022 |
|---|---|---|---|
| Debt-to-Equity | 2.38% | 40.91% | 41.63% |
| Debt-to-Assets | 1.34% | 23.45% | 23.84% |
| Debt-to-Capital | 2.33% | 29.03% | 29.39% |
| Net Debt to EBITDA | 0.10 | 1.01 | 0.83 |
| Current Ratio | 43.86% | N/A | N/A |
| Quick Ratio | 41.45% | 73.91% | 77.21% |
With modest leveraging and strong quick ratios, Diamondback Energy appears financially stable, which bodes well for managing economic downturns.
Fundamental Strength & Profitability
Examining metrics such as Return on Equity and profitability margins assists in gauging the company's effectiveness in generating profit relative to its resources.
| Year | 2024 | 2023 | 2022 |
|---|---|---|---|
| Return on Equity | 8.85% | 18.91% | 29.22% |
| Return on Assets | 4.96% | 10.84% | 16.73% |
| Net Margin | 30.28% | 37.36% | 45.48% |
| EBIT Margin | 43.45% | 52.58% | 61.02% |
| Gross Margin | 90.98% | 57.91% | 70.29% |
| R&D to Revenue | 0.00% | 0.00% | 0.00% |
Profitable operations, characterized by robust returns and margins, showcase Diamondback's ability to leverage its assets efficaciously, generating significant revenue in a competitive industry.
📈 Price Development
🗣️ Dividend Scoring System
| Criteria | Score | Score Bar |
|---|---|---|
| Dividend Yield | 4 | |
| Dividend Stability | 3 | |
| Dividend Growth | 2 | |
| Payout Ratio | 3 | |
| Financial Stability | 4 | |
| Dividend Continuity | 4 | |
| Cashflow Coverage | 3 | |
| Balance Sheet Quality | 5 |
Total Score: 28/40
✅ Rating
Diamondback Energy, Inc. presents a stable dividend profile with a focus on gradual growth and return of value. Although some caution is advised with regards to the payout ratio, the company's robust financial health and balance sheet quality make it a solid choice for dividend-oriented investors under stable market conditions.