Southern Copper Corp's Dividend Analysis
An In-depth Look at Southern Copper Corp's Dividend Performance and Sustainability
Southern Copper Corp(NYSE:SCCO) recently announced a dividend of $1 per share, payable on 2023-11-22, with the ex-dividend date set for 2023-11-07. As investors anticipate this upcoming payment, it is also crucial to examine the company's dividend history, yield, and growth rates. Using the data from GuruFocus, we delve into Southern Copper Corp's dividend performance and evaluate its sustainability.
What Does Southern Copper Corp Do?
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Southern Copper Corp is an integrated producer of copper and other minerals, operating 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 4.71% and a 12-month forward dividend yield of 5.39%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, Southern Copper Corp's annual dividend growth rate was 29.80%. Extended to a five-year horizon, this rate increased to 38.20% per year. And over the past decade, Southern Copper Corp's annual dividends per share growth rate stands at an impressive 14.20%.
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 23.74%.
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 2023-09-30, Southern Copper Corp's dividend payout ratio is 0.94, suggesting 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 2023-09-30, 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 11.30% per year on average, a rate that underperforms than approximately 50.34% 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 21.10% per year on average, a rate that underperforms than approximately 35.85% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 28.80%, underperforms than approximately 22.21% of global competitors.
Conclusion
While Southern Copper Corp's dividend payments, growth rate, and profitability are impressive, the high payout ratio raises questions about the sustainability of its dividends. However, the company's robust growth metrics and profitability rank indicate a strong potential for future earnings growth. Investors should keep a close eye on these factors when considering Southern Copper Corp as a potential dividend investment.
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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.
