Newcrest Mining Ltd's Dividend Analysis
Assessing the Sustainability and Growth of Newcrest Mining Ltd's Dividends
Newcrest Mining Ltd (NCMGY) recently announced a dividend of $1.1 per share, payable on 0000-00-00, with the ex-dividend date set for 2023-10-18. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into Newcrest Mining Ltd's dividend performance and assess its sustainability.
What Does Newcrest Mining Ltd Do?
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Newcrest is an Australia-based gold and, to a lesser extent, copper miner. Operations are mainly in Australia and Papua New Guinea. The company also owns a 32% stake in the Fruta Del Norte gold mine in Ecuador, while the acquisition of Brucejack in 2022 adds to its 70% stake in the Red Chris mine in Canada. The company is likely to produce around 2 million ounces of gold per year over the next decade, making it one of the larger global gold producers but still only accounting for less than 2% of total supply. Cash costs are below the industry average, underpinned by improvements at Lihir and Cadia. Organic growth options include its Havieron prospect, the Red Chris underground mine, and the high-grade Wafi-Golpu copper-gold prospect in PNG.
A Glimpse at Newcrest Mining Ltd's Dividend History
Newcrest Mining Ltd has maintained a consistent dividend payment record since 2016. Dividends are currently distributed on a bi-annually basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Newcrest Mining Ltd's Dividend Yield and Growth
As of today, Newcrest Mining Ltd currently has a 12-month trailing dividend yield of 1.76% and a 12-month forward dividend yield of 1.76%. This suggests an expectation of same dividend payments over the next 12 months.
Over the past three years, Newcrest Mining Ltd's annual dividend growth rate was 18.20%. Extended to a five-year horizon, this rate increased to 25.60% per year. Based on Newcrest Mining Ltd's dividend yield and five-year growth rate, the 5-year yield on cost of Newcrest Mining Ltd stock as of today is approximately 5.50%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-06-30, Newcrest Mining Ltd's dividend payout ratio is 0.35.
Newcrest Mining Ltd's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Newcrest Mining Ltd's profitability 7 out of 10 as of 2023-06-30, suggesting good profitability prospects. The company has reported net profit in 9 years out of past 10 years.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Newcrest Mining Ltd's growth rank of 7 out of 10 suggests that the company's growth trajectory is good relative to its competitors.
Revenue is the lifeblood of any company, and Newcrest Mining Ltd's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Newcrest Mining Ltd's revenue has increased by approximately 0.90% per year on average, a rate that underperforms than approximately 73.37% of global competitors.
The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, Newcrest Mining Ltd's earnings increased by approximately 2.40% per year on average, a rate that underperforms than approximately 59.45% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 25.60%, which underperforms than approximately 27.42% of global competitors.
Next Steps
Given Newcrest Mining Ltd's consistent dividend payments, robust dividend growth rate, reasonable payout ratio, good profitability, and positive growth metrics, the company appears to be a solid candidate for dividend investors. However, investors should continue to monitor the company's performance to ensure its growth and profitability sustain its dividend payments. GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
This article first appeared on GuruFocus.
