Mount Gibson Iron Limited (ASX:MGX): Dividend Is Coming In 2 Days, Should You Buy?

On the 15 October 2018, Mount Gibson Iron Limited (ASX:MGX) will be paying shareholders an upcoming dividend amount of AU$0.03 per share. However, investors must have bought the company’s stock before 22 August 2018 in order to qualify for the payment. That means you have only 2 days left! Is this future income a persuasive enough catalyst for investors to think about Mount Gibson Iron as an investment today? Below, I’m going to look at the latest data and analyze the stock and its dividend property in further detail.

See our latest analysis for Mount Gibson Iron

Here’s how I find good dividend stocks

When assessing a stock as a potential addition to my dividend Portfolio, I look at these five areas:

• Is its annual yield among the top 25% of dividend-paying companies?

• Has it paid dividend every year without dramatically reducing payout in the past?

• Has it increased its dividend per share amount over the past?

• Can it afford 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?

ASX:MGX Historical Dividend Yield August 19th 18

How does Mount Gibson Iron fare?

The current trailing twelve-month payout ratio for the stock is 25.79%, meaning the dividend is sufficiently covered by earnings. Going forward, analysts expect MGX’s payout to increase to 34.89% of its earnings, which leads to a dividend yield of around 2.04%.

Reliablity is an important factor for dividend stocks, particularly for income investors who want a strong track record of payment and a positive outlook for future payout. Unfortunately, it is really too early to view Mount Gibson Iron as a dividend investment. It has only been consistently paying dividends for 7 years, however, standard practice for reliable payers is to look for a 10-year minimum track record.

In terms of its peers, Mount Gibson Iron has a yield of 4.08%, which is on the low-side for Metals and Mining stocks.

Next Steps:

If you are building an income portfolio, then Mount Gibson Iron is a complicated choice since it has some positive aspects as well as negative ones. But if you are not exclusively a dividend investor, the stock could still be an interesting investment opportunity. Given that this is purely a dividend analysis, I recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. I’ve put together three essential aspects you should look at:

1. Future Outlook: What are well-informed industry analysts predicting for MGX’s future growth? Take a look at our free research report of analyst consensus for MGX’s outlook.

2. Historical Performance: What has MGX’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.

3. 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.