Yahoo Finance Is Lundin Mining Corporation (TSE:LUN) An Attractive Dividend Stock?
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Dividends can be underrated but they form a large part of investment returns, playing an important role in compounding returns in the long run. In the last few years Lundin Mining Corporation (TSE:LUN) has paid a dividend to shareholders. Today it yields 1.8%. Does Lundin Mining tick all the boxes of a great dividend stock? Below, I’ll take you through my analysis.
Check out our latest analysis for Lundin 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 its annual yield among the top 25% of dividend-paying companies?
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?
Is is able to pay the current rate of dividends from its earnings?
Based on future earnings growth, will it be able to continue to payout dividend at the current rate?
Does Lundin Mining pass our checks?
Lundin Mining has a trailing twelve-month payout ratio of 33%, which means that the dividend is covered by earnings. In the near future, analysts are predicting lower payout ratio of 16% which, assuming the share price stays the same, leads to a dividend yield of around 2.0%. However, EPS should increase to $0.34, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment.
When assessing the forecast sustainability of a dividend it is also worth considering 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. The reality is that it is too early to consider Lundin Mining as a dividend investment. It has only been consistently paying dividends for 2 years, however, standard practice for reliable payers is to look for a 10-year minimum track record.
In terms of its peers, Lundin Mining has a yield of 1.8%, which is high for Metals and Mining stocks but still below the low risk savings rate.
Next Steps:
After digging a little deeper into Lundin Mining’s yield, it’s easy to see why you should be cautious investing in the company just for the dividend. But if you are not exclusively a dividend investor, the stock could still be an interesting investment opportunity. 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. There are three important factors you should further research:
Future Outlook: What are well-informed industry analysts predicting for LUN’s future growth? Take a look at our free research report of analyst consensus for LUN’s outlook.
Valuation: What is LUN 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 LUN 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.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. On rare occasion, data errors may occur. Thank you for reading.
