A large part of investment returns can be generated by dividend-paying stock given their role in compounding returns over time. Over the past 10 years, Randgold Resources Limited (LON:RRS) has returned an average of 1.00% per year to shareholders in terms of dividend yield. Does Randgold Resources tick all the boxes of a great dividend stock? Below, I’ll take you through my analysis. View out our latest analysis for Randgold Resources
5 questions I ask before picking a dividend stock
If you are a dividend investor, you should always assess these five key metrics:
Is it paying an annual yield above 75% 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 have the ability to keep paying its dividends going forward?
How does Randgold Resources fare?
The company currently pays out 70.85% of its earnings as a dividend, according to its trailing twelve-month data, which means that the dividend is covered by earnings. In the near future, analysts are predicting a higher payout ratio of 101.24%, leading to a dividend yield of 4.71%. In addition to this, EPS should increase to $3.42. The higher payout forecasted, along with higher earnings, should lead to greater dividend income for investors moving forward. However this does bring about uncertainty around the sustainability of the payout ratio.
If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. RRS has increased its DPS from $0.060 to $1.4 in the past 10 years. It has also been paying out dividend consistently during this time, as you’d expect for a company increasing its dividend levels. This is an impressive feat, which makes RRS a true dividend rockstar.
In terms of its peers, Randgold Resources produces a yield of 2.47%, which is on the low-side for Metals and Mining stocks.
With these dividend metrics in mind, I definitely rank Randgold Resources as a strong income stock, and is worth further research for anyone who considers dividends an important part of their portfolio strategy. Given that this is purely a dividend analysis, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. Below, I’ve compiled three important factors you should look at:
Future Outlook: What are well-informed industry analysts predicting for RRS’s future growth? Take a look at our free research report of analyst consensus for RRS’s outlook.
Valuation: What is RRS 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 RRS is currently mispriced by the market.
Other 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 pass 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.