Yahoo Finance South32 Limited (ASX:S32): Ex-Dividend Is In 3 Days
Attention dividend hunters! South32 Limited (ASX:S32) will be distributing its dividend of US$0.062 per share on the 11 October 2018, and will start trading ex-dividend in 3 days time on the 13 September 2018. Is this future income stream a compelling catalyst for dividend investors to think about the stock as an investment today? Let’s take a look at South32’s most recent financial data to examine its dividend characteristics in more detail.
Check out our latest analysis for South32
5 questions I ask before picking a dividend stock
If you are a dividend investor, you should always assess these five key metrics:
Does it pay an annual yield higher than 75% of dividend payers?
Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?
Has dividend per share risen in the past couple of years?
Is is able to pay the current rate of dividends from its earnings?
Will it have the ability to keep paying its dividends going forward?
How does South32 fare?
South32 has a trailing twelve-month payout ratio of 40.7%, which means that the dividend is covered by earnings. Going forward, analysts expect S32’s payout to increase to 51.6% of its earnings, which leads to a dividend yield of 4.5%. Furthermore, EPS should increase to $0.27. The higher payout forecasted, along with higher earnings, should lead to greater dividend income for investors moving forward.
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. The reality is that it is too early to consider South32 as a dividend investment. It has only been consistently paying dividends for 3 years, however, standard practice for reliable payers is to look for a 10-year minimum track record.
Compared to its peers, South32 produces a yield of 4.1%, which is on the low-side for Metals and Mining stocks.
Next Steps:
Taking all the above into account, South32 is a complicated pick for dividend investors given that there are a couple of positive things about it as well as negative. 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, 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 important factors you should further examine:
Future Outlook: What are well-informed industry analysts predicting for S32’s future growth? Take a look at our free research report of analyst consensus for S32’s outlook.
Valuation: What is S32 worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether S32 is currently mispriced by the market.
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.
