Yahoo Finance Something To Consider Before Buying Hochschild Mining plc (LON:HOC) For The 1.9% Dividend
A large part of investment returns can be generated by dividend-paying stock given their role in compounding returns over time. Historically, Hochschild Mining plc (LON:HOC) has paid dividends to shareholders, and these days it yields 1.9%. Does Hochschild Mining tick all the boxes of a great dividend stock? Below, I’ll take you through my analysis.
Check out our latest analysis for Hochschild Mining
5 checks you should do on 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?
Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?
Has it increased its dividend per share amount over the past?
Does earnings amply cover its dividend payments?
Will the company be able to keep paying dividend based on the future earnings growth?
Does Hochschild Mining pass our checks?
Hochschild Mining has a trailing twelve-month payout ratio of 62%, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting lower payout ratio of 28%, leading to a dividend yield of around 1.9%. However, EPS should increase to $0.087, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment.
When thinking about whether a dividend is sustainable, another factor to consider is the cash flow. A company with strong cash flow, relative to earnings, can sometimes sustain a high pay out ratio.
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. Dividend payments from Hochschild Mining have been volatile in the past 10 years, with some years experiencing significant drops of over 25%. These characteristics do not bode well for income investors seeking reliable stream of dividends.
In terms of its peers, Hochschild Mining has a yield of 1.9%, 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, I recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. There are three key 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.
