Dividend Focus: Northern Oil and Gas Before Critical Date

In the world of dividend payments, timing is everything. Investors interested in Northern Oil and Gas shares should pay particular attention, as the stock will trade ex-dividend in three days. This day is crucial as it determines who receives the coveted distributions. For those interested, it is advisable to acquire the shares before December 30th to secure the planned dividend of $0.42 per share, which will be paid out on January 31st. Last year, Northern Oil and Gas rewarded its shareholders with a total dividend of $1.68, which at a current share price of $36.10 resulted in a dividend yield of 4.7%. Long-term investors typically benefit from stable and growing dividends. However, the question of the sustainability of these distributions arises. Despite a conservative payout ratio of just 19% based on earnings, a less rosy picture emerges when considering free cash flow, as the company distributed 137% of its free funds. This high ratio raises concerns, as it may indicate that the dividend might not be sustainable in the long term. A continued discrepancy between earnings and free cash flow would be problematic for the long-term distribution policy. Despite the company's continuous earnings growth averaging 6.8% over the past five years, the high dividend payments overshadowed the available cash funds.