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Investors who want to cash in on Hindustan Zinc Limited’s (NSE:HINDZINC) upcoming dividend of ₹20.00 per share have only 4 days left to buy the shares before its ex-dividend date, 31 October 2018, in time for dividends payable on the 21 November 2018. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I take a deeper dive into Hindustan Zinc’s latest financial data to analyse its dividend attributes.

View our latest analysis for Hindustan Zinc

5 checks you should do on a dividend stock

When researching a dividend stock, I always follow the following screening criteria:

• Is it the top 25% annual dividend yield payer?

• Has it consistently paid a stable dividend without missing a payment or drastically cutting payout?

• Has dividend per share amount increased over the past?

• Is its earnings sufficient to payout dividend at the current rate?

• Based on future earnings growth, will it be able to continue to payout dividend at the current rate?

Does Hindustan Zinc pass our checks?

Hindustan Zinc has a trailing twelve-month payout ratio of 30%, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting a higher payout ratio of 44%, leading to a dividend yield of around 5.0%. Furthermore, EPS should increase to ₹23.95. The higher payout forecasted, along with higher earnings, should lead to greater dividend income for investors moving forward.

When considering the sustainability of dividends, it is also worth checking the cash flow of a company. A company with strong cash flow, relative to earnings, can sometimes sustain a high pay out ratio.

If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. Although HINDZINC’s per share payments have increased in the past 10 years, it has not been a completely smooth ride. Shareholders would have seen a few years of reduced payments in this time.

Compared to its peers, Hindustan Zinc has a yield of 2.9%, which is on the low-side for Metals and Mining stocks.

Next Steps:

Considering the dividend attributes we analyzed above, Hindustan Zinc is definitely worth keeping an eye on for someone looking to build a dedicated income portfolio. Given that this is purely a dividend analysis, you should always research extensively before deciding whether or not a stock is an appropriate investment for you. I always recommend analysing the company’s fundamentals and underlying business before making an investment decision. I’ve put together three important aspects you should further examine: