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Attention dividend hunters! China Molybdenum Co Ltd. (SEHK:3993) will be distributing its dividend of CN¥0.09 per share on the 20 July 2018, and will start trading ex-dividend in 3 days time on the 15 June 2018. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I examine China Molybdenum’s latest financial data to analyse its dividend characteristics. See our latest analysis for China Molybdenum
How I analyze a dividend stock
When assessing a stock as a potential addition to my dividend Portfolio, I look at these five areas:
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Is its annual yield among the top 25% of dividend-paying companies?
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Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?
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Has the amount of dividend per share grown over the past?
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Can it afford to pay the current rate of dividends from its earnings?
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Will it be able to continue to payout at the current rate in the future?
How well does China Molybdenum fit our criteria?
China Molybdenum has a trailing twelve-month payout ratio of 43.05%, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting a higher payout ratio of 52.00%, leading to a dividend yield of 3.25%. Moreover, EPS should increase to CN¥0.28. The higher payout forecasted, along with higher earnings, should lead to greater dividend income for investors moving forward. If dividend is a key criteria in your investment consideration, then you need to make sure the dividend stock you’re eyeing out is reliable in its payments. Although 3993’s per share payments have increased in the past 10 years, it has not been a completely smooth ride. Investors have seen reductions in the dividend per share in the past, although, it has picked up again. In terms of its peers, China Molybdenum produces a yield of 1.89%, which is on the low-side for Metals and Mining stocks.
Next Steps:
Taking into account the dividend metrics, China Molybdenum ticks most of the boxes as a strong dividend investment, putting it in my list of top dividend payers. 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. There are three essential aspects you should look at:
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Future Outlook: What are well-informed industry analysts predicting for 3993’s future growth? Take a look at our free research report of analyst consensus for 3993’s outlook.
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Valuation: What is 3993 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 3993 is currently mispriced by the market.
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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.