June 21, 2025 a 03:30 pm
TRGP: Dividend Analysis - Targa Resources Corp.
Despite challenges in the energy sector, Targa Resources Corp. has demonstrated steady dividend distribution over the years. With 15 years of dividend history, the company shows resilience in maintaining payouts even amidst market volatility. However, recent adjustments in the dividend growth rates need careful consideration for future expectations.
📊 Overview
Analyzing Targa Resources Corp.'s recent dividend performance reveals a stable but cautious approach. The company, operating in the energy sector, boasts a dividend yield of 1.90% with a current dividend per share of 2.80 USD, accumulating 15 years of consistent payout history. The last dividend cut or suspension has not been recorded, reflecting a robust dividend framework.
| Metric | Details |
|---|---|
| Sector | Energy |
| Dividend Yield | 1.90% |
| Current Dividend Per Share | 2.80 USD |
| Dividend History | 15 years |
| Last Cut or Suspension | None |
🗣️ Dividend History
The history of dividend payments is crucial in assessing a company's financial resilience and shareholder commitment. Targa Resources' history spans 15 years, indicating a stable payout strategy. This history showcases the company's dedication to rewarding shareholders consistently.
| Year | Dividend Per Share |
|---|---|
| 2025 | 1.75 |
| 2024 | 2.75 |
| 2023 | 1.85 |
| 2022 | 1.40 |
| 2021 | 0.40 |
📈 Dividend Growth
Dividend growth is indicative of the company's potential financial health and profitability. Over the past five years, Targa Resources has exhibited a negligible average dividend growth rate of -0.05%, rolling back some previously attained gains. This may denote underlying financial restructuring or strategic shifts.
| Time | Growth |
|---|---|
| 3 years | 0.90% |
| 5 years | -0.05% |
The average dividend growth is -0.05% over 5 years. This shows moderate but not steady dividend growth, highlighting possible financial adjustments.
⚠️ Payout Ratio
Payout ratios provide insight into the sustainability of dividend payouts. A moderate EPS-based payout ratio of 46.59% suggests that the current earnings sufficiently cover the dividends. However, the high free cash flow-based ratio of 94.82% indicates substantial reliance on available cash flows.
| Key Figure | Ratio |
|---|---|
| EPS-based | 46.59% |
| Free cash flow-based | 94.82% |
The EPS-based payout ratio (46.59%) exhibits prudence compared to the alarmingly high FCF-based payout ratio (94.82%), suggesting potential liquidity challenges in high payout years.
✅ Cashflow & Capital Efficiency
Assessing cash flow metrics along with capital efficiency is essential for evaluating a company's financial sustainability and strategic investments. The patterns indicate strategic allocation of capital with a focus on maintaining cash flow stability. However, the CAPEX and operational cash flow relationship demands scrutiny.
| Metric | 2024 | 2023 | 2022 |
|---|---|---|---|
| Free Cash Flow Yield | 1.74% | 4.23% | 6.26% |
| Earnings Yield | 3.25% | 6.90% | 5.37% |
| CAPEX to Operating Cash Flow | 0.83 | 0.74 | 0.56 |
| Stock-Based Compensation to Revenue | 0.40% | 0.39% | 0.27% |
| Free Cash Flow / Operating Cash Flow Ratio | 0.19 | 0.26 | 0.44 |
The cash flow metrics suggest a steady state with prudent capital allocation decisions. However, increasing reliance on free cash flow for dividends could pose challenges during low cash flow phases.
🏦 Balance Sheet & Leverage Analysis
A comprehensive leverage analysis reveals significant findings about the company's financial stability and debt structure. Targa Resources shows a high debt-to-equity ratio, reflecting significant leverage which might affect flexibility in downturns. Improving liquidity metrics remain paramount.
| Metric | 2024 | 2023 | 2022 |
|---|---|---|---|
| Debt-to-Equity | 5.50 | 4.75 | 4.34 |
| Debt-to-Assets | 0.63 | 0.63 | 0.59 |
| Debt-to-Capital | 0.85 | 0.83 | 0.81 |
| Net Debt to EBITDA | 3.41 | 3.24 | 4.01 |
| Current Ratio | 0.72 | 0.79 | 0.77 |
| Quick Ratio | 0.62 | 0.66 | 0.64 |
The balance sheet analysis indicates a leveraged position with maintained liquidity, requiring attention for future debt management and refinancing plans.
💼 Fundamental Strength & Profitability
Existing fundamental indicators outline Targa Resources' financial health, highlighting operational efficiency and profitability. The high return on equity illustrates strong shareholder returns, whereas consistent research and development investments indicate future growth prospects.
| Metric | 2024 | 2023 | 2022 |
|---|---|---|---|
| Return on Equity | 49.34% | 49.13% | 33.64% |
| Return on Assets | 5.63% | 6.51% | 4.58% |
| Net Margin | 7.81% | 8.38% | 4.28% |
| EBIT Margin | 16.51% | 16.38% | 10.08% |
| EBITDA Margin | 25.27% | 24.69% | 13.52% |
| Gross Margin | 25.98% | 25.24% | 14.10% |
The substantial profitability ratios depict operational acumen, while steady margin profiles highlight consistent financial stewardship.
🔍 Price Development
🌟 Dividend Scoring System
| Criteria | Score | Score Bar |
|---|---|---|
| Dividend yield | 3 | |
| Dividend Stability | 4 | |
| Dividend Growth | 2 | |
| Payout Ratio | 3 | |
| Financial Stability | 2 | |
| Dividend Continuity | 4 | |
| Cashflow Coverage | 2 | |
| Balance Sheet Quality | 3 |
Overall Score: 23/40
📝 Rating
Targa Resources Corp. presents a moderate investment case with positive dividend stability and continuity but is tempered by cautious growth rates and significant leverage. Investors should consider these metrics within the larger portfolio context, particularly regarding market volatility and sector-specific dynamics.