Interested In Sandfire Resources NL (ASX:SFR)’s Upcoming AU$0.07 Dividend? You Have 3 Days Left
Investors who want to cash in on Sandfire Resources NL’s (ASX:SFR) upcoming dividend of AU$0.07 per share have only 3 days left to buy the shares before its ex-dividend date, 04 March 2019, in time for dividends payable on the 19 March 2019. Is this future income stream a compelling catalyst for dividend investors to think about the stock as an investment today? Let’s take a look at Sandfire Resources’s most recent financial data to examine its dividend characteristics in more detail.
View our latest analysis for Sandfire Resources
How I analyze a dividend stock
When researching a dividend stock, I always follow the following screening criteria:
Is it the top 25% annual dividend yield payer?
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 its earnings sufficient to payout dividend at the current rate?
Will it have the ability to keep paying its dividends going forward?
Does Sandfire Resources pass our checks?
The current trailing twelve-month payout ratio for the stock is 37%, meaning the dividend is sufficiently covered by earnings. Going forward, analysts expect SFR’s payout to remain around the same level at 34% of its earnings. Assuming a constant share price, this equates to a dividend yield of around 4.5%. In addition to this, EPS should increase to A$0.92.
If you want to dive deeper into the sustainability of a certain payout ratio, you may wish to consider the cash flow of the business. Cash flow is important because companies with strong cash flow can usually sustain higher payout ratios.
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. The reality is that it is too early to consider Sandfire Resources as a dividend investment. It has only been consistently paying dividends for 4 years, however, standard practice for reliable payers is to look for a 10-year minimum track record.
Relative to peers, Sandfire Resources produces a yield of 3.6%, which is on the low-side for Metals and Mining stocks.
Next Steps:
Whilst there are few things you may like about Sandfire Resources from a dividend stock perspective, the truth is that overall it probably is not the best choice for a dividend investor. 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, 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 pertinent aspects you should further research:
Future Outlook: What are well-informed industry analysts predicting for SFR’s future growth? Take a look at our free research report of analyst consensus for SFR’s outlook.
Valuation: What is SFR 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 SFR 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.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
