Assessing the Sustainability of Fresnillo PLC's Upcoming Dividend
Fresnillo PLC (FNLPF, Financial) recently announced a dividend of $0.04 per share, payable on 2024-05-29, with the ex-dividend date set for 2024-04-18. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into Fresnillo PLC's dividend performance and assess its sustainability.
What Does Fresnillo PLC Do?
Fresnillo PLC is a silver mining company and the largest gold producer. The group has seven reportable operating segments, which are represented by six producing mines. The Fresnillo, Juanicipio and Saucito mines are located in the state of Zacatecas and are some of the world's largest underground silver mines. The Ciénega mine, located in the state of Durango, an underground gold mine. The San Julian mine, located on the border of Durango states, which is an underground silver-gold mine. The Herradura, Soledad-Dipolos, and Noche Buena are all open pit gold mines, located in the state of Sonora. Herradura and Saucito combined account for more than half of group revenue.
A Glimpse at Fresnillo PLC's Dividend History
Fresnillo PLC has maintained a consistent dividend payment record since 2010. Dividends are currently distributed on a bi-annually basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Fresnillo PLC's Dividend Yield and Growth
As of today, Fresnillo PLC currently has a 12-month trailing dividend yield of 2.02% and a 12-month forward dividend yield of 0.77%. This suggests an expectation of decreased dividend payments over the next 12 months.
Over the past three years, Fresnillo PLC's annual dividend growth rate was 3.30%. Extended to a five-year horizon, this rate decreased to -8.00% per year. Based on Fresnillo PLC's dividend yield and five-year growth rate, the 5-year yield on cost of Fresnillo PLC stock as of today is approximately 1.33%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-12-31, Fresnillo PLC's dividend payout ratio is 0.47.
Fresnillo PLC's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Fresnillo PLC's profitability 8 out of 10 as of 2023-12-31, suggesting good profitability prospects. The company has reported positive net income for each of year over the past decade, further solidifying its high profitability.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Fresnillo PLC's growth rank of 8 out of 10 suggests that the company's growth trajectory is good relative to its competitors.
Revenue is the lifeblood of any company, and Fresnillo PLC's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Fresnillo PLC's revenue has increased by approximately 5.70% per year on average, a rate that underperforms approximately 62.33% of global competitors.
The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, Fresnillo PLC's earnings increased by approximately -9.20% per year on average, a rate that underperforms approximately 66.65% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of -0.20%, which underperforms approximately 69.99% of global competitors.
Next Steps
In conclusion, while Fresnillo PLC has shown a history of consistent dividend payments, its recent dividend yield trends and growth rates suggest caution. The payout ratio indicates a sustainable dividend policy, supported by a strong profitability rank. However, the growth metrics present a mixed picture, with revenue growth outpacing a significant portion of global competitors but earnings and EBITDA growth rates lagging behind. Investors must weigh these factors, considering the company's ability to sustain and grow its dividends against the backdrop of its financial performance and industry outlook. For those seeking to expand their portfolio with high-dividend yield stocks, GuruFocus Premium users can utilize the High Dividend Yield Screener for informed investment decisions.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
