In This Article:
Dividends play an important role in compounding returns in the long run and end up forming a sizeable part of investment returns. Historically, Sarda Energy & Minerals Limited (NSE:SARDAEN) has been paying a dividend to shareholders. Today it yields 1.7%. Let’s dig deeper into whether Sarda Energy & Minerals should have a place in your portfolio.
See our latest analysis for Sarda Energy & Minerals
How I analyze a dividend stock
When researching a dividend stock, I always follow the following screening criteria:
-
Is its annual yield among the top 25% of dividend-paying companies?
-
Has it consistently paid a stable dividend without missing a payment or drastically cutting payout?
-
Has it increased its dividend per share amount over the past?
-
Is is able to pay the current rate of dividends from its earnings?
-
Will it be able to continue to payout at the current rate in the future?
How well does Sarda Energy & Minerals fit our criteria?
The current trailing twelve-month payout ratio for the stock is 9.8%, which means that the dividend is covered by earnings. Furthermore, analysts have not forecasted a dividends per share for the future, which makes it hard to determine the yield shareholders should expect, and whether the current payout is sustainable, moving forward.
When considering the sustainability of dividends, it is also worth checking the cash flow of a company. Companies with strong cash flow can sustain a higher payout ratio, while companies with weaker cash flow generally cannot.
If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. Whilst its per-share payments have increased during the past 10 years, there has been some hiccups. Investors have seen reductions in the dividend per share in the past, although, it has picked up again.
Relative to peers, Sarda Energy & Minerals generates a yield of 1.7%, which is on the low-side for Metals and Mining stocks.
Next Steps:
Taking into account the dividend metrics, Sarda Energy & Minerals 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, 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. Below, I’ve compiled three key aspects you should further research:
-
Future Outlook: What are well-informed industry analysts predicting for SARDAEN’s future growth? Take a look at our free research report of analyst consensus for SARDAEN’s outlook.
-
Historical Performance: What has SARDAEN’s returns been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
-
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 past 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. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.