In This Article:
Readers hoping to buy Freeport-McMoRan Inc. (NYSE:FCX) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. The ex-dividend date is usually set to be one business day before the record date which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the dividend. The ex-dividend date is important because any transaction on a stock needs to have been settled before the record date in order to be eligible for a dividend. Thus, you can purchase Freeport-McMoRan's shares before the 13th of January in order to receive the dividend, which the company will pay on the 1st of February.
The company's next dividend payment will be US$0.15 per share, and in the last 12 months, the company paid a total of US$0.30 per share. Calculating the last year's worth of payments shows that Freeport-McMoRan has a trailing yield of 0.7% on the current share price of $41.88. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.
View our latest analysis for Freeport-McMoRan
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Freeport-McMoRan paid out just 8.4% of its profit last year, which we think is conservatively low and leaves plenty of margin for unexpected circumstances. Yet cash flow is typically more important than profit for assessing dividend sustainability, so we should always check if the company generated enough cash to afford its dividend. The good news is it paid out just 4.4% of its free cash flow in the last year.
It's encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don't drop precipitously.
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. It's encouraging to see Freeport-McMoRan has grown its earnings rapidly, up 40% a year for the past five years. Freeport-McMoRan looks like a real growth company, with earnings per share growing at a cracking pace and the company reinvesting most of its profits in the business.