Yahoo Finance Is Randgold Resources Limited (LON:RRS) A Smart Pick For Income Investors?
Dividends play an important role in compounding returns in the long run and end up forming a sizeable part of investment returns. Randgold Resources Limited (LSE:RRS) has returned to shareholders over the past 10 years, an average dividend yield of 1.00% annually. Should it have a place in your portfolio? Let’s take a look at Randgold Resources in more detail. Check out our latest analysis for Randgold Resources
5 checks you should use to assess a dividend stock
When researching a dividend stock, I always follow the following screening criteria:
Does it pay an annual yield higher than 75% of dividend payers?
Has it consistently paid a stable dividend without missing a payment or drastically cutting payout?
Has dividend per share amount increased over the past?
Is it able to pay the current rate of dividends from its earnings?
Will it be able to continue to payout at the current rate in the future?
Does Randgold Resources pass our checks?
Randgold Resources has a trailing twelve-month payout ratio of 70.85%, which means that the dividend is covered by earnings. Going forward, analysts expect RRS’s payout to increase to 100.70% of its earnings, which leads to a dividend yield of 4.60%. In addition to this, EPS should increase to $3.52. The higher payout forecasted, along with higher earnings, should lead to greater dividend income for investors moving forward. However this does bring about uncertainty around the sustainability of the payout ratio. If dividend is a key criteria in your investment consideration, then you need to make sure the dividend stock you’re eyeing out is reliable in its payments. RRS has increased its DPS from $0.06 to $1.47 in the past 10 years. During this period it has not missed a payment, as one would expect for a company increasing its dividend. These are all positive signs of a great, reliable dividend stock. In terms of its peers, Randgold Resources has a yield of 2.56%, which is on the low-side for Metals and Mining stocks.
Next Steps:
With this in mind, I definitely rank Randgold Resources as a strong dividend stock, and makes it worth further research for anyone who likes steady income generation from their portfolio. 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 fundamental aspects you should further examine:
Future Outlook: What are well-informed industry analysts predicting for RRS’s future growth? Take a look at our free research report of analyst consensus for RRS’s outlook.
Valuation: What is RRS 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 RRS is currently mispriced by the market.
Other 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 pass 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.