Should You Buy St Barbara Limited (ASX:SBM) For Its 2.02% Dividend?
Dividends play an important role in compounding returns in the long run and end up forming a sizeable part of investment returns. St Barbara Limited (ASX:SBM) has returned an average dividend yield of 2.00% annually to shareholders. Should it have a place in your portfolio? Let’s take a look at St Barbara in more detail.
Check out our latest analysis for St Barbara
How I analyze a dividend stock
If you are a dividend investor, you should always assess these five key metrics:
Does it pay an annual yield higher than 75% of dividend payers?
Does it consistently pay out dividends without missing a payment of significantly cutting payout?
Has dividend per share amount increased over the past?
Is is able to pay the current rate of dividends from its earnings?
Will it have the ability to keep paying its dividends going forward?
Does St Barbara pass our checks?
The company currently pays out 27.84% of its earnings as a dividend, according to its trailing twelve-month data, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting a payout ratio of 28.55%, leading to a dividend yield of 2.48%. Moreover, EPS should increase to A$0.37.
If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. Unfortunately, it is really too early to view St Barbara as a dividend investment. Last year was the company’s first dividend payment, so it is certainly early days. The standard practice for reliable payers is to look for 10 or so years of track record.
Compared to its peers, St Barbara generates a yield of 2.02%, which is on the low-side for Metals and Mining stocks.
Next Steps:
After digging a little deeper into St Barbara’s yield, it’s easy to see why you should be cautious investing in the company just for the dividend. On the other hand, if you are not strictly just a dividend investor, the stock could still be offering some interesting investment opportunities. Given that this is purely a dividend analysis, you should always research extensively before deciding whether or not a stock is an appropriate investment for you. I always recommend analysing the company’s fundamentals and underlying business before making an investment decision. Below, I’ve compiled three pertinent aspects you should look at:
Future Outlook: What are well-informed industry analysts predicting for SBM’s future growth? Take a look at our free research report of analyst consensus for SBM’s outlook.
Valuation: What is SBM 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 SBM 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.
To help readers see past 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. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
