{"id":11631,"date":"2025-03-13T01:21:12","date_gmt":"2025-03-13T01:21:12","guid":{"rendered":"https:\/\/finderica.com\/?p=11631"},"modified":"2025-03-13T01:21:12","modified_gmt":"2025-03-13T01:21:12","slug":"a-small-cap-energy-stock-with-a-5-4-yield","status":"publish","type":"post","link":"https:\/\/finderica.com\/?p=11631","title":{"rendered":"A Small Cap Energy Stock With a 5.4% Yield"},"content":{"rendered":"
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You may not be familiar with Riley Exploration Permian<\/strong> (NYSE: REPX). It\u2019s a small cap oil producer that doesn\u2019t trade a lot of volume each day. But with the stock boasting an attractive 5.4% yield, income investors should give it a look to see if they can rely on the dividend.<\/p>\n

The company\u2019s free cash flow has been an adventure. After several years in the tens of millions, it swung to a huge negative in 2023. Then, last year, it soared to its highest level in at least a decade at $117 million.<\/p>\n

This year, my forecast is that free cash flow will decline, but barely \u2013 to $114 million. It wouldn\u2019t take too much to move that figure above $117 million, which would flip its growth from negative to positive.<\/p>\n

\"Chart:<\/a><\/a><\/p>\n

With free cash flow growth expected to be negative, Safety Net assesses the stock a one-point penalty. If it turns out that Riley experiences positive free cash flow growth, that penalty will be removed.<\/p>\n

The good news is Riley\u2019s payout ratio is low.<\/p>\n

Last year, the company paid shareholders $28 million in dividends, or just 24% of its free cash flow. This year, it is forecast to pay just about the same amount, with the payout ratio staying steady at just under 25%.<\/p>\n

That means even if free cash flow suffers a big decline, Riley should still have enough cash to sustain the dividend.<\/p>\n

For most companies, my threshold for the payout ratio is 75%. In other words, I want to see a company paying out 75% or less of its free cash flow in dividends. That way, there is a buffer between its current cash flow and what it needs to afford its dividend, so a rough year or two wouldn\u2019t jeopardize the payout.<\/p>\n

Riley Exploration Permian has paid a dividend since 2021 and has raised it every year since.<\/p>\n

So its dividend-paying history is short, but solid.<\/p>\n

The only blemish on its dividend safety scorecard is the forecast for slightly lower free cash flow this year. But even then, the company would still have ample amounts of cash to pay the dividend. And if free cash flow comes in just $3 million higher than my projection, even that little ding on its record would go away.<\/p>\n

You may not have heard of Riley Exploration Permian before, but with its low risk of cutting its 5.4% dividend yield, it may be worth investigating further.<\/p>\n

Dividend Safety Rating: B<\/strong><\/p>\n

\"Dividend<\/p>\n

What stock\u2019s dividend safety would you like me to analyze next? Let me know here.<\/p>\n

You can also take a look to see whether we\u2019ve written about your favorite stock recently. Just click on the word \u201cSearch\u201d at the top right part of the Wealthy Retirement<\/em> homepage, type in the company name, and hit \u201cEnter.\u201d<\/p>\n

Also, keep in mind that Safety Net can analyze only individual stocks, not exchange-traded funds, mutual funds, or closed-end funds.<\/p>\n<\/p><\/div>\n