A High-Yield Dividend Stock You Can Buy and Hold Forever

Are you looking for high dividends as well as growth? This stock continues to be a top option!

| More on:
analyze data

Image source: Getty Images

Investors can definitely still find high-yield dividend stocks that are worth buying and holding forever. While some returns might be on the lower side, the beauty of these stocks is in the stability and consistent payouts. It’s a bit like planting a tree. The growth is slow and steady, but it offers long-term rewards that keep giving back over time. So, even if the returns don’t shoot to the moon, these stocks can still be solid picks for the patient investor, especially this stock on the TSX today.

PHX Energy

PHX Energy Services (TSX:PHX) is a Canadian energy services company that provides specialized directional drilling services to oil and natural gas companies. With its advanced technology and expertise, PHX Energy helps clients optimize well-bore placement. This can enhance production and reduce costs. The company operates in key energy markets across North America and internationally, ensuring that it can serve a diverse range of projects. One of the standout features of PHX Energy is its focus on innovation, with a portfolio of high-tech equipment and software designed to improve drilling efficiency and precision.

In terms of investment potential, PHX Energy has demonstrated resilience in a volatile industry. The energy sector can be unpredictable. Yet PHX Energy has managed to maintain a solid position thanks to its specialized offerings and ability to adapt to changing market conditions. For investors interested in energy services with a technical edge, PHX Energy could be a compelling option.

Into earnings

PHX Energy’s second-quarter 2024 earnings highlight a steady performance, with consolidated revenue of $154.2 million. Just shy of the $155.6 million from the same period in 2023. The company saw strong results in its Canadian division. This achieved a record $38.2 million in quarterly revenue, up 25% year over year. This growth helped balance the softer performance in the U.S., where revenues dropped by 7% amid a decline in the U.S. rig count. Despite challenges, PHX Energy’s premium technologies and strong market presence kept its U.S. division resilient.

On the financial front, the company reported adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $30 million. Down from $34.8 million in the same quarter last year. Earnings were also lower at $12.9 million, or $0.26 per share, compared to $18.1 million, or $0.35 per share, in 2023. However, PHX Energy maintained its commitment to shareholders, increasing dividend payments by 24% and repurchasing over 358,000 shares. Looking ahead, the company remains cautiously optimistic. Particularly in the U.S., as it continues to focus on its strategic growth initiatives in both Canadian and international markets.

Future focus

Looking ahead, investors in PHX Energy should keep an eye on a few key factors. First, the company’s renewed normal course issuer bid (NCIB) will allow it to repurchase up to 3.36 million shares. This could drive value for shareholders by reducing the number of outstanding shares. The share-buyback plan, along with the company’s Return of Capital Strategy (ROCS), demonstrates PHX Energy’s commitment to rewarding its investors, especially in a volatile market environment. Watching how these share repurchases impact stock performance and earnings per share will be crucial for long-term investors.

Additionally, PHX Energy’s dividend strategy remains a strong point of interest. With a forward annual dividend yield of nearly 9%, the company continues to deliver solid income opportunities. Investors should monitor the sustainability of this dividend, particularly as market conditions evolve and capital expenditures fluctuate. PHX Energy’s focus on efficient capital allocation will be key to maintaining its dividend and potentially increasing returns for shareholders over time.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

More on Dividend Stocks

profit rises over time
Dividend Stocks

These 2 Dow Stocks Are Set to Soar in 2025 and Beyond

Two Dow Jones stocks are screaming buys but Canadians must hold them in an RRSP or RRIF to avoid paying…

Read more »

TFSA (Tax free savings account) acronym on wooden cubes on the background of stacks of coins
Dividend Stocks

How to Use Your TFSA to Earn Ultimate Passive Income

If you have a TFSA, then you have the key to creating ultimate passive income. All you need is a…

Read more »

Confused person shrugging
Dividend Stocks

Better Buy: Fortis Stock or Hydro One Stock?

Let's do a compare and contrast of these two top utilities stocks right now, shall we?

Read more »

A close up color image of a small green plant sprouting out of a pile of Canadian dollar coins "loonies."
Dividend Stocks

Boost Your Passive Income: 2 Canadian High-Yielders at a Bargain

Nutrien (TSX:NTR) stock and another play that appear like fantastic dividend bargains in mid-November.

Read more »

3 colorful arrows racing straight up on a black background.
Dividend Stocks

TSX Stocks Soaring Higher With No Signs of Slowing

Three TSX stocks continue to beat the market and could soar higher in an improving investment landscape.

Read more »

Hourglass and stock price chart
Dividend Stocks

Goeasy Stock: Is It Heading for a 52-Week High?

Goeasy stock has been edging higher, especially after another record-setting earnings report. So are 52-week highs in sight?

Read more »

Piggy bank with word TFSA for tax-free savings accounts.
Dividend Stocks

Here’s the Average TFSA Balance at Age 44 in Canada

You can invest your TFSA in funds like the BMO Canadian High Yield Dividend ETF (TSX:ZDV) to grow the balance.

Read more »

Electricity transmission towers with orange glowing wires against night sky
Dividend Stocks

The Best Telecom Stock to Buy Before 2025

Choosing the safest stock from a decimated sector can be tricky, but if there is a reasonable chance of full…

Read more »