Southern Copper Corp's Dividend Analysis
Insights into Southern Copper Corp's Upcoming Dividend Payment
Southern Copper Corp (NYSE:SCCO) recently announced a dividend of $0.8 per share, payable on 2024-02-29, with the ex-dividend date set for 2024-02-12. 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 Southern Copper Corp's dividend performance and assess its sustainability.
What Does Southern Copper Corp Do?
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Southern Copper Corp is an integrated producer of copper and other minerals and operates mining, smelting, and refining facilities in Peru and Mexico. Its production includes copper, molybdenum, zinc, and silver. The company operates through the following segments: Peruvian operations, Mexican open-pit operations, and Mexican underground mining operations. Southern Copper generates the majority of its revenue from the sale of copper and the rest from the sale of non-copper products, such as molybdenum, silver, zinc, lead, and gold. Its geographical segments are The Americas, Europe, and Asia.
A Glimpse at Southern Copper Corp's Dividend History
Southern Copper Corp has maintained a consistent dividend payment record since 1996. Dividends are currently distributed on a quarterly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Southern Copper Corp's Dividend Yield and Growth
As of today, Southern Copper Corp currently has a 12-month trailing dividend yield of 4.99% and a 12-month forward dividend yield of 3.99%. This suggests an expectation of decrease in dividend payments over the next 12 months.
Over the past three years, Southern Copper Corp's annual dividend growth rate was 38.70%. Extended to a five-year horizon, this rate decreased to 27.00% per year. And over the past decade, Southern Copper Corp's annual dividends per share growth rate stands at an impressive 30.10%.
Based on Southern Copper Corp's dividend yield and five-year growth rate, the 5-year yield on cost of Southern Copper Corp stock as of today is approximately 16.52%.
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 2023-12-31, Southern Copper Corp's dividend payout ratio is 127%, which may suggest that the company's dividend may not be sustainable.
Southern Copper Corp's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Southern Copper Corp's profitability 9 out of 10 as of 2023-12-31, suggesting good profitability prospects. The company has reported positive net income for each year over the past decade, further solidifying its high profitability.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Southern Copper Corp's growth rank of 9 out of 10 suggests that the company's growth trajectory is good relative to its competitors.
Revenue is the lifeblood of any company, and Southern Copper Corp's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Southern Copper Corp's revenue has increased by approximately 7.40% per year on average, a rate that underperforms approximately 60.65% 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, Southern Copper Corp's earnings increased by approximately 15.60% per year on average, a rate that underperforms approximately 44.63% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 14.50%, which underperforms approximately 46.92% of global competitors.
Next Steps
In conclusion, while Southern Copper Corp's impressive historical dividend growth and high yield on cost are attractive, the high payout ratio raises concerns about the sustainability of its dividend payments. The company's strong profitability rank and growth prospects provide some reassurance, but the underperformance in revenue and earnings growth compared to peers warrants caution. Investors should weigh these factors when considering Southern Copper Corp's dividend outlook. For those seeking high-dividend yield opportunities, GuruFocus Premium users can screen for 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.
