Metals

Central Asia Metals (LON:CAML) Has Announced That It Will Be Increasing Its Dividend To $0.10

Central Asia Metals plc’s (LON:CAML) dividend will be increasing from last year’s payment of the same period to $0.10 on 21st of October. The payment will take the dividend yield to 9.7%, which is in line with the average for the industry.

View our latest analysis for Central Asia Metals

Central Asia Metals’ Dividend Is Well Covered By Earnings

We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue. The last dividend was quite easily covered by Central Asia Metals’ earnings. This indicates that quite a large proportion of earnings is being invested back into the business.

EPS is set to fall by 33.3% over the next 12 months. Assuming the dividend continues along recent trends, we believe the payout ratio could be 55%, which we are pretty comfortable with and we think is feasible on an earnings basis.

historic-dividend
AIM:CAML Historic Dividend September 17th 2022

Dividend Volatility

The company has a long dividend track record, but it doesn’t look great with cuts in the past. The annual payment during the last 10 years was $0.0982 in 2012, and the most recent fiscal year payment was $0.251. This means that it has been growing its distributions at 9.9% per annum over that time. It’s good to see the dividend growing at a decent rate, but the dividend has been cut at least once in the past. Central Asia Metals might have put its house in order since then, but we remain cautious.

The Dividend Looks Likely To Grow

With a relatively unstable dividend, it’s even more important to evaluate if earnings per share is growing, which could point to a growing dividend in the future. It’s encouraging to see that Central Asia Metals has been growing its earnings per share at 17% a year over the past five years. Shareholders are getting plenty of the earnings returned to them, which combined with strong growth makes this quite appealing.

Central Asia Metals Looks Like A Great Dividend Stock

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. The company is generating plenty of cash, and the earnings also quite easily cover the distributions. However, it is worth noting that the earnings are expected to fall over the next year, which may not change the long term outlook, but could affect the dividend payment in the next 12 months. Taking this all into consideration, this looks like it could be a good dividend opportunity.

It’s important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. However, there are other things to consider for investors when analysing stock performance. To that end, Central Asia Metals has 2 warning signs (and 1 which doesn’t sit too well with us) we think you should know about. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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