Crescent Point Energy Corp. (TSX:CPG)(NYSE:CPG) reduced its famous dividend in August, but the distribution still offers a nice yield and investors are wondering if the new payout is safe.

Let’s take a look at the current situation to see if Crescent Point is a good income pick.

Cash flow is king

Crescent Point brought in Q3 funds from operations of $484 million. Capital expenditures for the quarter totaled $321 million, so the company easily covered those costs. The remaining $163 million was available for the dividend, and it all went out to shareholders.

Unfortunately, it wasn’t quite enough as dividend payments for the quarter totaled $218 million.

Should you worry?

Crescent Point still paid its previous $0.23 per share monthly distribution for part of the third quarter. The new payout of $0.10 per share will only eat up about $150 million in quarterly cash flow, so the company should be able to meet its obligations assuming capital expenditures and funds from operations remain stable going forward.

Output

Crescent Point increased its Q3 year-over-year production by about 4% per share as additional output came online from two recent acquisitions. Production for Q3 2015 hit a record 172, 579 boe/d.

Balance sheet situation

Crescent Point ended Q3 with $4.4 billion in long-term debt, up about 70% from the same time last year. The debt level has increased significantly, but the overall obligation is still at a manageable level.

The company remains well within its allowable ratios. The Q3 senior debt-to-capital ratio was 0.31, far below the 0.55 limit. The senior-debt-to-EBITDA and total-debt-to-EBITDA numbers are also well within the lending requirements.

Crescent Point has credit facilities of $3.6 billion, of which $1.4 billion is still available.

Should income investors buy?

Crescent Point has more than 50% of its remaining 2015 production hedged at $88/bbl and 33% of 2016 output hedged at $83/bbl. Management says Crescent Point can meet its cash flow needs as long as WTI oil prices remain above US$40/bbl.

At the moment, WTI is pretty much at $40 with no indications that a rally is imminent.

Crescent Point has fantastic assets and a strong management team. As a long-term play on the oil sector, it is probably a decent bet, but I wouldn’t buy it for the distribution.

The #1 dividend stock for the rest of 2015?

Our analysts have identified this TOP Dividend-Growth Stock as a prime pick in the energy space. Today, you can download the name, ticker symbol, and price guidance for this oversold stock absolutely FREE.

Simply click here to receive your Special FREE Report, "1 Top Dividend Stock for 2015 and Beyond."

NEW! This Stock Could Be Like Buying Amazon In 1997

For only the 5th time in over 14 years, Motley Fool co-founder David Gardner just issued a Buy Recommendation on this recent Canadian IPO.

Stock Advisor Canada’s Chief Investment Adviser, Iain Butler, also recommended this company back in March – and it’s already up a whopping 57%!

Enter your email address below to claim your copy of this brand new report, “Breakthrough IPO Receives Rare Endorsement.”

Fool contributor Andrew Walker has no position in any stocks mentioned.