Unraveling African Rainbow Minerals Ltd's (AFBOF) Dividend Performance and Sustainability
An in-depth analysis of the South African mining company's dividend history, yield, growth rates, and future prospects.
African Rainbow Minerals Ltd(AFBOF) recently announced a dividend of $12 per share, payable on 2023-10-09, with the ex-dividend date set for 2023-10-04. 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 deep dive into African Rainbow Minerals Ltd's dividend performance and assess its sustainability.
What Does African Rainbow Minerals Ltd Do?
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African Rainbow Minerals Ltd is a South African diversified mining and minerals company. The group has various operating divisions: platinum, ferrous, coal, copper, and corporate. In addition, African Rainbow Minerals has an investment in gold through its shareholding in Harmony. Ferrous is the group's largest division, contributing roughly half of group revenue, closely trailed by the platinum division. The platinum division includes the Two Rivers Platinum Mine as a 51% subsidiary and an interest in the Modikwa Platinum Mine. The ferrous division comprises Assmang as a 50% joint venture, which includes iron ore, manganese, and chrome operations.
A Glimpse at African Rainbow Minerals Ltd's Dividend History
African Rainbow Minerals Ltd has maintained a consistent dividend payment record since 2018. Dividends are currently distributed on a bi-annually basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down African Rainbow Minerals Ltd's Dividend Yield and Growth
As of today, African Rainbow Minerals Ltd currently has a 12-month trailing dividend yield of 21.19% and a 12-month forward dividend yield of 14.24%. This suggests an expectation of decreased dividend payments over the next 12 months.
African Rainbow Minerals Ltd's dividend yield of 21.19% is near a 10-year high and outperforms than 96.2 of global competitors in the Metals & Mining industry, suggesting that the company's dividend yield stands out as an attractive proposition for income investors.
Over the past three years, African Rainbow Minerals Ltd's annual dividend growth rate was 40.70%. Extended to a five-year horizon, this rate increased to 55.20% per year. Over the past decade, African Rainbow Minerals Ltd's annual dividends per share growth rate stands at an impressive 20.20%.
Based on African Rainbow Minerals Ltd's dividend yield and five-year growth rate, the 5-year yield on cost of African Rainbow Minerals Ltd stock as of today is approximately 190.80%.
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 2022-12-31, African Rainbow Minerals Ltd's dividend payout ratio is 0.49.
African Rainbow Minerals Ltd's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks African Rainbow Minerals Ltd's profitability 8 out of 10 as of 2022-12-31, suggesting good profitability prospects. The company has reported net profit in 9 years out of the past 10 years.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. African Rainbow Minerals Ltd's growth rank of 8 out of 10 suggests that the company's growth trajectory is good relative to its competitors.
Revenue is the lifeblood of any company, and African Rainbow Minerals Ltd's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. African Rainbow Minerals Ltd's revenue has increased by approximately 24.10% per year on average, a rate that outperforms than approximately 75.59% 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, African Rainbow Minerals Ltd's earnings increased by approximately 51.70% per year on average, a rate that outperforms than approximately 88.75% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 48.40%, which outperforms than approximately 93.3% of global competitors.
Next Steps
In conclusion, African Rainbow Minerals Ltd's consistent dividend payments, impressive growth rate, sustainable payout ratio, and strong profitability and growth metrics make it a compelling choice for income investors. However, as with all investments, it's crucial to conduct thorough research and consider the company's overall financial health before making a decision. Will African Rainbow Minerals Ltd continue its impressive run, or are there challenges on the horizon? Only time will tell.
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This article first appeared on GuruFocus.
