Yahoo Finance Should Income Investors Buy Hochschild Mining plc (LON:HOC) Before Its Ex-Dividend?
Attention dividend hunters! Hochschild Mining plc (LON:HOC) will be distributing its dividend of US$0.02 per share on the 20 September 2018, and will start trading ex-dividend in 2 days time on the 30 August 2018. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I take a deeper dive into Hochschild Mining’s latest financial data to analyse its dividend attributes.
See our latest analysis for Hochschild Mining
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:
Is it paying an annual yield above 75% of dividend payers?
Does it consistently pay out dividends without missing a payment of significantly cutting payout?
Has the amount of dividend per share grown over the past?
Does earnings amply cover its dividend payments?
Will it have the ability to keep paying its dividends going forward?
How well does Hochschild Mining fit our criteria?
The current trailing twelve-month payout ratio for the stock is 61.7%, meaning the dividend is sufficiently covered by earnings. However, going forward, analysts expect HOC’s payout to fall to 23.2% of its earnings, which leads to a dividend yield of 1.8%. However, EPS should increase to $0.096, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment.
Reliablity is an important factor for dividend stocks, particularly for income investors who want a strong track record of payment and a positive outlook for future payout. Not only have dividend payouts from Hochschild Mining fallen over the past 10 years, it has also been highly volatile during this time, with drops of over 25% in some years. This means that dividend hunters should probably steer clear of the stock, at least for now until the track record improves.
In terms of its peers, Hochschild Mining has a yield of 1.7%, which is on the low-side for Metals and Mining stocks.
Next Steps:
After digging a little deeper into Hochschild Mining’s yield, it’s easy to see why you should be cautious investing in the company just 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. I’ve put together three fundamental aspects you should further research:
Future Outlook: What are well-informed industry analysts predicting for HOC’s future growth? Take a look at our free research report of analyst consensus for HOC’s outlook.
Valuation: What is HOC 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 HOC 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.
