Murphy Oil Corp (NYSE:MUR): A High-Yield Dividend Stock with Sustainable Payouts and Solid Financials

For investors looking for steady income, dividend investing is a key strategy. One way to find strong dividend stocks is by filtering for those with a high ChartMill Dividend Rating, a score that looks at yield, growth, sustainability, and past reliability, while checking that the company has solid profitability and financial health. This method balances good payouts with stable operations, lowering the chance of dividend cuts.

Murphy Oil Corp (NYSE:MUR) stands out in this type of screen, with a Dividend Rating of 7/10, along with neutral but steady Profitability (5/10) and Health (5/10) scores. Here’s how it fits the criteria for dividend-focused investors:

Dividend Strength

• Yield: At 5.25%, MUR’s dividend is much higher than the S&P 500 average (~2.34%) and competitive in its industry (average 6.49%). This makes it a high-yield option without being overly risky.
• Growth: Its annual dividend growth of 3.72% is modest, but the company has paid dividends for over 10 years without cuts in the last three years, showing consistency.
• Sustainability: The payout ratio of 46.44% of earnings is reasonable, and expected earnings growth (9.31% per year) supports future dividends. Free cash flow coverage is also stable, which is important for long-term payouts.

Profitability and Health: Key Factors

• Profitability: MUR’s margins are mixed but mostly positive. Its gross margin of 68.43% beats 77% of peers, though recent drops in profit margins need watching. The company produces steady operating cash flow, which helps cover dividends.
• Financial Health: A Debt-to-Equity ratio of 0.29 shows a careful approach to debt, and its Altman-Z score (1.93) suggests low near-term bankruptcy risk. However, liquidity metrics (like a Current Ratio of 0.76) are weaker, which is typical for energy companies.

Valuation and Growth

MUR trades at a P/E of 10.6, below both the industry (20.7) and S&P 500 (27.7) averages, indicating it may be undervalued. While revenue growth is slow (-0.88% expected), EPS growth forecasts (9.31%) support its ability to keep paying dividends.

Why These Metrics Are Important

The screening process focuses on yield with sustainability—avoiding stocks where high payouts hide risks. MUR’s balanced payout ratio, earnings growth, and strong debt metrics point to stability, while its valuation offers some safety. For more details, see the full fundamental report here.

Finding Other Opportunities

MUR is one of several stocks picked by the Best Dividend Stocks screen, which selects high Dividend Ratings along with strong financials. Investors can tweak settings (like yield or sector focus) to narrow results.

Disclaimer: This analysis is not investment advice. Do your own research or talk to a financial advisor before making decisions. Market conditions and company performance can shift quickly.