According to its operating and financial report for the second quarter of fiscal 2017, Franco-Nevada Corp. (FNV, Financial) is going ex-dividend Thursday.
The U.S. gold royalty and stream company announced a quarterly dividend of 23 cents per share, which is in line with the previous one that was paid on June 29 and is a 4.5% increase from the quarterly dividend of 22 cents that Franco-Nevada paid on March 30.
The company increased the annual dividend for its shareholders 10 times in a row.
Franco-Nevada will pay the interim dividend to its shareholders on Sept. 28.
Based on the quarterly dividend, the annual dividend paid will be 92 cents per share. The dividend yield is 1.09% according to a share price of $83.32.
Under Franco-Nevada’s Dividend Reinvestment Plan, or DRIP, the company’s shareholders have the option to either get cash for the dividend’s payment or a certain number of Franco-Nevada’s ordinary shares in proportion to the volume of shares already held. In case the shareholder opts to be paid with additional ordinary shares, Franco-Nevada states that it will issue these ordinary shares “through treasury at a 3% discount to the average market price.”
As it was for the second three months of fiscal 2017, when the $32.1 million dividend payment was sustained by a solid quarter delivered by Franco-Nevada beating expectations on earnings and revenue; thanks to an 8.6% increase year over year in the total volume of gold equivalent ounces sold, shareholders can expect the next quarterly dividend payment to be bolstered by another strong quarter in terms of revenue, earnings and cash flow since the yellow metal – the largest factor in determining Franco-Nevada’s profitability – is soaring on the bullion market.
For the third quarter of fiscal 2017, analysts expect Franco-Nevada will close the period reporting an EPS – adjusted to one-time charges – of 25 cents or an adjusted net profit of approximately $46.4 million according to a volume of shares outstanding that as of the most recent quarter was about 185.46 million. The average figure of EPS is a mean of a 20 cents to 28 cents per share range. Nine analysts were surveyed on Franco-Nevada’s third quarter of fiscal 2017 EPS; they backed their estimates on a quarterly revenue of $165.23 million.
Besides a rising commodity, two other key factors for a solid third quarter are that, being a gold royalty and stream company, Franco-Nevada’s financials are not charged with those operating costs that are usually associated with mining the precious metal and that the company runs its business on a well-diversified portfolio of assets.
The balance sheet of Franco-Nevada is solid with a total liquidity of $1.714 billion, including a line of available credit of $1.1 billion and no debt.
GuruFocus gives Franco Nevada a financial strength rating of 9 out of a total of 10, signaling that the U.S. gold royalty and stream company has more than enough financial resources to keep a rich portfolio of income-producing assets running and to develop a large number of mineral venture and exploration projects.
Franco-Nevada is trading at $81.51 per share with a market capitalization of $15.13 billion, a price-book (P/B) ratio of 3.13 and an EV-EBITDA ratio of 28.56. The gold royalty stock is trading just a few dollars below its 52-week high of $85.03 while its 52-week low is $53.31.
The average target price is $75.62 per share and the recommendation rating – that expresses a synthesis of the universe of analysts who, by consensus, hold an opinion on Franco-Nevada – is 2.7 out of 5.
Disclosure: I have no position in Franco-Nevada.
