Short answer:
Based on the press‑release alone there isn’t enough quantitative information to calculate a precise payout ratio or cash‑flow‑coverage metric for the $0.03‑per‑share quarterly dividend. However, a few qualitative clues can be gleaned that help frame whether the dividend is likely to be sustainable:
| Indicator from the release | What it suggests for dividend sustainability |
|---|---|
| “Continued debt reduction” – the company is actively using cash to pay down leverage. | This signals that management is prioritising balance‑sheet strength, which can be a positive sign for dividend stability (a healthier balance sheet reduces the risk of having to cut or suspend the payout). |
| No mention of a “special” dividend – the $0.03 payment is described as a “quarterly cash dividend.” | It is being treated as a regular, recurring distribution rather than a one‑off, which implies the board believes the company can fund it on an ongoing basis. |
| Earnings/operating results are being released – the company is providing a full Q2 results deck and will discuss outlook on a conference call. | The fact that the dividend is announced together with earnings results indicates the board has evaluated the numbers (net income, free cash flow, and coverage ratios) before setting the distribution. |
| Dividend amount – $0.03 per share translates to $0.12 per share annually, or roughly 2–3 % of Berry’s typical share price (Berry’s stock has historically traded in the $4‑$6 range). | A modest payout relative to price and to cash generation tends to be easier to sustain, especially for a company that is still focusing on debt reduction. |
What we still need to know
To move from a qualitative “likely sustainable” assessment to a concrete, numbers‑backed conclusion, the following data points are required (all of which are normally disclosed in Berry’s quarterly Form 10‑Q or earnings slide deck):
| Metric | Why it matters | Typical “healthy” threshold |
|---|---|---|
| Free cash flow (FCF) per share (Operating cash flow – CapEx) | Direct source of cash that can be used to pay dividends. | FCF ≥ dividend amount (ideally ≥ 150 % of the dividend). |
| Net income per share | Basis for traditional payout‑ratio calculations. | Payout ratio ≤ 30‑40 % is common for growth‑oriented companies; higher ratios can be sustainable if cash flow is strong and debt is low. |
| Cash‑flow‑to‑dividend ratio (FCF ÷ total quarterly dividend payout) | Indicates how many times the dividend could be covered by cash generated in the quarter. | ≥ 1.5–2.0 is considered comfortable. |
| Debt‑to‑EBITDA or Debt‑to‑FCF | Shows how much leverage remains after the dividend. | The lower, the better—especially important when a company is actively paying down debt. |
| Historical dividend trend | Consistency (or growth) in the dividend over past quarters/years signals management’s commitment. | No cuts for at least 3‑5 quarters is a good sign. |
How to calculate the payout ratio with the information you’ll find in the 10‑Q
Determine total quarterly dividend payout
[
\text{Total Dividend} = \text{Shares Outstanding} \times \$0.03
]
(Berry’s most recent 10‑Q will list the “Weighted‑average shares outstanding.”)Calculate net‑income‑based payout ratio
[
\text{Payout Ratio} = \frac{\text{Total Dividend}}{\text{Quarterly Net Income}}
]Calculate cash‑flow‑based payout ratio (more telling for sustainability)
[
\text{Cash‑Flow Payout Ratio} = \frac{\text{Total Dividend}}{\text{Free Cash Flow}}
]Compare to benchmarks (see table above). If the cash‑flow‑based payout is below 50 % and the dividend represents less than 30 % of net income, the dividend is generally considered well‑covered.
What the available information hints at
- Dividend size: $0.03 per share is modest. Even if Berry’s free cash flow were in the low‑single‑digit‑dollar‑per‑share range, the dividend would still be covered comfortably.
- Debt‑reduction focus: Management appears to be balancing two priorities—reducing leverage and maintaining a shareholder return. The fact that they have not eliminated the dividend suggests they have enough excess cash after meeting debt‑repayment targets.
- Market expectations: A $0.12 annual dividend on a stock trading around $5 yields roughly a 2‑3 % yield. For a company that is not a pure utility or REIT, this is a modest “sticky” payout rather than a high‑yield promise, which is typically easier to sustain.
Bottom‑line recommendation
- Based on the press release alone, the $0.03 quarterly dividend appears to be modest and likely sustainable, especially because Berry is simultaneously reducing debt—a sign that cash generation is not being stretched thin.
- To confirm, review Berry’s Q2 2025 Form 10‑Q (or the accompanying slide deck). Look specifically at:
- Free cash flow (or cash from operations after CapEx),
- Net income,
- Total shares outstanding,
- Debt levels and any covenant‑related cash‑flow tests.
- If the cash‑flow‑to‑dividend ratio is ≥ 1.5 and the payout ratio (net‑income based) is ≤ 30‑40 %, the dividend can be deemed comfortably sustainable.
If either metric is substantially higher, the board may be relying on retained earnings or may be prepared to adjust the dividend in future quarters.
Action steps for an investor
- Download the Q2 2025 earnings slide deck from www.bry.com and locate the “Cash Flow” or “Free Cash Flow” slide.
- Calculate the ratios using the formulae above.
- Listen to the earnings call (August 7, 2025) – management often addresses dividend policy explicitly, including any forward‑looking guidance on cash flow and debt amortization.
- Compare with prior quarters to see if the ratio is stable, improving, or deteriorating.
- If the ratios look healthy and the company’s debt reduction remains on track, you can reasonably conclude that the $0.03 quarterly dividend is sustainable for the near‑term.
Key take‑away: The announced dividend is small relative to typical cash‑flow generation for a mid‑cap industrial company, and the company’s concurrent debt‑reduction effort signals a disciplined capital‑allocation mindset. Provided Berry’s free cash flow comfortably exceeds the $0.03 per share payout (which the detailed 10‑Q will confirm), the dividend should be sustainable. If you need exact numbers, pull the latest 10‑Q and run the two simple ratio calculations outlined above.