Shares of Ternium SA. (NYSE:TX) will begin trading ex-dividend in 3 days. To qualify for the dividend check of $1.1 per share, investors must have owned the shares prior to 04 May 2018, which is the last day the company’s management will finalize their list of shareholders to which they will send dividend payments. 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 Ternium’s most recent financial data to examine its dividend characteristics in more detail. Check out our latest analysis for Ternium
5 checks you should do on a dividend stock
Whenever I am looking at a potential dividend stock investment, I always check these five 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 it able to pay the current rate of dividends from its earnings?
- Will the company be able to keep paying dividend based on the future earnings growth?
Does Ternium pass our checks?
Ternium has a trailing twelve-month payout ratio of 21.78%, which means that the dividend is covered by earnings. Going forward, analysts expect TX’s payout to increase to 28.88% of its earnings, which leads to a dividend yield of around 3.27%. However, EPS is forecasted to fall to $4.99 in the upcoming year. Therefore, although payout is expected to increase, the fall in earnings may not equate to higher dividend income. If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. Although TX’s per share payments have increased in the past 10 years, it has not been a completely smooth ride. Shareholders would have seen a few years of reduced payments in this time. Compared to its peers, Ternium produces a yield of 2.70%, which is on the low-side for Metals and Mining stocks.
Keeping in mind the dividend characteristics above, Ternium is definitely worth considering for investors looking to build a dedicated income portfolio. 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 essential aspects you should look at:
- Future Outlook: What are well-informed industry analysts predicting for TX’s future growth? Take a look at our free research report of analyst consensus for TX’s outlook.
- Valuation: What is TX 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 TX 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.