The board of Sandstorm Gold Ltd. (TSE:SSL) has announced that it will pay a dividend on the 31st of January, with investors receiving $0.02 per share. This payment means the dividend yield will be 1.0%, which is below the average for the industry.
View our latest analysis for Sandstorm Gold
Sandstorm Gold's Projected Earnings Seem Likely To Cover Future Distributions
While yield is important, another factor to consider about a company's dividend is whether the current payout levels are feasible. Based on the last payment, Sandstorm Gold was quite comfortably earning enough to cover the dividend. This indicates that a lot of the earnings are being reinvested into the business, with the aim of fueling growth.
Looking forward, earnings per share is forecast to rise by 40.1% over the next year. If the dividend continues on this path, the payout ratio could be 48% by next year, which we think can be pretty sustainable going forward.
Sandstorm Gold Is Still Building Its Track Record
The dividend has been pretty stable looking back, but the company hasn't been paying one for very long. This makes it tough to judge how it would fare through a full economic cycle. The annual payment during the last 3 years was $0.0613 in 2022, and the most recent fiscal year payment was $0.0554. Doing the maths, this is a decline of about 3.4% per year. Declining dividends isn't generally what we look for as they can indicate that the company is running into some challenges.
We Could See Sandstorm Gold's Dividend Growing
Investors could be attracted to the stock based on the quality of its payment history. It's encouraging to see that Sandstorm Gold has been growing its earnings per share at 9.1% a year over the past five years. Earnings are on the uptrend, and it is only paying a small portion of those earnings to shareholders.
We Really Like Sandstorm Gold's Dividend
Overall, we like to see the dividend staying consistent, and we think Sandstorm Gold might even raise payments in the future. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. All in all, this checks a lot of the boxes we look for when choosing an income stock.
Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. However, there are other things to consider for investors when analysing stock performance. For instance, we've picked out 1 warning sign for Sandstorm Gold that investors should take into consideration. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
About TSX:SSL
Proven track record and fair value.
