4 Days Left Until Franco-Nevada Corporation (TSE:FNV) Trades Ex-Dividend,
Investors who want to cash in on Franco-Nevada Corporation’s (TSE:FNV) upcoming dividend of US$0.24 per share have only 4 days left to buy the shares before its ex-dividend date, 12 September 2018, in time for dividends payable on the 27 September 2018. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I take a deeper dive into Franco-Nevada’s latest financial data to analyse its dividend attributes.
View our latest analysis for Franco-Nevada
5 checks you should use to assess a dividend stock
When assessing a stock as a potential addition to my dividend Portfolio, I look at these five areas:
Is their annual yield among the top 25% of dividend payers?
Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?
Has it increased its dividend per share amount over the past?
Is is able to pay the current rate of dividends from its earnings?
Will it be able to continue to payout at the current rate in the future?
How does Franco-Nevada fare?
The current trailing twelve-month payout ratio for the stock is 78.0%, which means that the dividend is covered by earnings. In the near future, analysts are predicting lower payout ratio of 69.0%, leading to a dividend yield of around 1.6%. However, EPS should increase to $1.28, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment.
When considering the sustainability of dividends, it is also worth checking the cash flow of a company. A company with strong cash flow, relative to earnings, can sometimes sustain a high pay out ratio.
If dividend is a key criteria in your investment consideration, then you need to make sure the dividend stock you’re eyeing out is reliable in its payments. Whilst its per-share payments have increased during the past 10 years, there has been some hiccups. Shareholders would have seen a few years of reduced payments in this time.
Compared to its peers, Franco-Nevada produces a yield of 1.5%, which is high for Metals and Mining stocks but still below the low risk savings rate.
Next Steps:
Taking all the above into account, Franco-Nevada is a complicated pick for dividend investors given that there are a couple of positive things about it as well as negative. However, if you are not strictly just a dividend investor, the stock could still offer some interesting investment opportunities. Given that this is purely a dividend analysis, you should always research extensively before deciding whether or not a stock is an appropriate investment for you. I always recommend analysing the company’s fundamentals and underlying business before making an investment decision. Below, I’ve compiled three pertinent aspects you should further examine:
Future Outlook: What are well-informed industry analysts predicting for FNV’s future growth? Take a look at our free research report of analyst consensus for FNV’s outlook.
Valuation: What is FNV worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether FNV is currently mispriced by the market.
Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
