Centamin plc (LON:CEY): Ex-Dividend Is In 2 Days, Should You Buy?

Important news for shareholders and potential investors in Centamin plc (LON:CEY): The dividend payment of US$0.025 per share will be distributed into shareholder on 28 September 2018, and the stock will begin trading ex-dividend at an earlier date, 30 August 2018. What does this mean for current shareholders and potential investors? Below, I will explain how holding Centamin can impact your portfolio income stream, by analysing the stock’s most recent financial data and dividend attributes.

See our latest analysis for Centamin

5 questions to ask before buying a dividend stock

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

  • 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 amount increased 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?
LSE:CEY Historical Dividend Yield August 27th 18
LSE:CEY Historical Dividend Yield August 27th 18

Does Centamin pass our checks?

The current trailing twelve-month payout ratio for CEY is 106%, meaning the dividend is not sufficiently covered by its earnings. In the near future, analysts are predicting a more sensible payout ratio of 78.8%, leading to a dividend yield of 6.4%. EPS is also forecasted to fall to $0.097 in the upcoming year. The lower EPS on top of a lower payout ratio will lead to a fall in dividend payment moving forward.

If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. Unfortunately, it is really too early to view Centamin as a dividend investment. It has only been consistently paying dividends for 4 years, however, standard practice for reliable payers is to look for a 10-year minimum track record.

Compared to its peers, Centamin has a yield of 8.3%, which is high for Metals and Mining stocks.

Next Steps:

If you are building an income portfolio, then Centamin is a complicated choice since it has some positive aspects as well as negative ones. However, if you are not strictly just a dividend investor, the stock could still offer some interesting investment opportunities. Given that this is purely a dividend analysis, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. I’ve put together three fundamental factors you should further research:

  1. Future Outlook: What are well-informed industry analysts predicting for CEY’s future growth? Take a look at our free research report of analyst consensus for CEY’s outlook.
  2. Valuation: What is CEY 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 CEY is currently mispriced by the market.
  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.