In This Article:
Zijin Mining Group Company Limited (HKG:2899) has pleased shareholders over the past 10 years, by paying out dividends. The company is currently worth HK$81b, and now yields roughly 3.6%. Let’s dig deeper into whether Zijin Mining Group should have a place in your portfolio.
View our latest analysis for Zijin Mining Group
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 it the top 25% annual dividend yield payer?
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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 dividend per share amount increased 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 have the ability to keep paying its dividends going forward?
How well does Zijin Mining Group fit our criteria?
The company currently pays out 44% of its earnings as a dividend, according to its trailing twelve-month data, meaning the dividend is sufficiently covered by earnings. Going forward, analysts expect 2899’s payout to increase to 54% of its earnings, which leads to a dividend yield of 3.8%. However, EPS is forecasted to fall to CN¥0.21 in the upcoming year. Therefore, although payout is expected to increase, the fall in earnings may not equate to higher dividend income.
When assessing the forecast sustainability of a dividend it is also worth considering the cash flow of the business. Companies with strong cash flow can sustain a higher payout ratio, while companies with weaker cash flow generally cannot.
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. In the case of 2899 it has increased its DPS from CN¥0.060 to CN¥0.090 in the past 10 years. It has also been paying out dividend consistently during this time, as you’d expect for a company increasing its dividend levels. These are all positive signs of a great, reliable dividend stock.
Relative to peers, Zijin Mining Group produces a yield of 3.6%, which is on the low-side for Metals and Mining stocks.
Next Steps:
Considering the dividend attributes we analyzed above, Zijin Mining Group 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. There are three fundamental aspects you should look at: