Dividends play a key role in compounding returns over time and can form a large part of our portfolio return. RHI Magnesita NV (LON:RHIM) has returned an average dividend yield of 1.00% annually to shareholders. Should it have a place in your portfolio? Let’s take a look at RHI Magnesita in more detail.
Check out our latest analysis for RHI Magnesita
Here’s how I find good dividend stocks
Whenever I am looking at a potential dividend stock investment, I always check these five metrics:
- Is it the top 25% annual dividend yield payer?
- Has it consistently paid a stable dividend without missing a payment or drastically cutting payout?
- Has dividend per share risen in the past couple of years?
- Is its earnings sufficient to payout dividend at the current rate?
- Will it have the ability to keep paying its dividends going forward?
How does RHI Magnesita fare?
RHI Magnesita has a negative payout ratio, meaning that the company is not yet profitable and is paying dividend by dipping into its retained earnings.
If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. The reality is that it is too early to consider RHI Magnesita as a dividend investment. Last year was the company’s first dividend payment, so it is certainly early days. The standard practice for reliable payers is to look for 10 or so years of track record.
In terms of its peers, RHI Magnesita generates a yield of 1.32%, which is on the low-side for Basic Materials stocks.
Next Steps:
Now you know to keep in mind the reason why investors should be careful investing in RHI Magnesita for the dividend. On the other hand, if you are not strictly just a dividend investor, the stock could still be offering some interesting investment opportunities. 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. Below, I’ve compiled three important factors you should further examine:
- Future Outlook: What are well-informed industry analysts predicting for RHIM’s future growth? Take a look at our free research report of analyst consensus for RHIM’s outlook.
- Valuation: What is RHIM 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 RHIM 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.