Over the past 10 years Zijin Mining Group Company Limited (HKG:2899) has been paying dividends to shareholders. The company currently pays out a dividend yield of 3.3% to shareholders, making it a relatively attractive dividend stock. Let’s dig deeper into whether Zijin Mining Group should have a place in your portfolio.
See our latest analysis for Zijin Mining Group
5 questions to ask before buying a dividend stock
If you are a dividend investor, you should always assess these five key metrics:
- Is it the top 25% annual dividend yield payer?
- Has it paid dividend every year without dramatically reducing payout in the past?
- Has it increased its dividend per share amount over the past?
- Is is able 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?
Does Zijin Mining Group pass our checks?
Zijin Mining Group has a trailing twelve-month payout ratio of 44%, which means that the dividend is covered by earnings. Going forward, analysts expect 2899’s payout to increase to 54% of its earnings. Assuming a constant share price, this equates to a dividend yield of around 3.5%. However, EPS is forecasted to fall to CN¥0.20 in the upcoming year. Therefore, although payout is expected to increase, the fall in earnings may not equate to higher dividend income.
If you want to dive deeper into the sustainability of a certain payout ratio, you may wish to consider 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 there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. 2899 has increased its DPS from CN¥0.060 to CN¥0.090 in the past 10 years. It has also been paying out dividend consistently during this time, as you’d expect for a company increasing its dividend levels. These are all positive signs of a great, reliable dividend stock.
Relative to peers, Zijin Mining Group produces a yield of 3.3%, which is on the low-side for Metals and Mining stocks.
Next Steps:
Keeping in mind the dividend characteristics above, Zijin Mining Group is definitely worth considering for investors looking to build a dedicated income portfolio. 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 aspects you should further examine:
- Future Outlook: What are well-informed industry analysts predicting for 2899’s future growth? Take a look at our free research report of analyst consensus for 2899’s outlook.
- Valuation: What is 2899 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 2899 is currently mispriced by the market.
- Other 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.