Assessing Newmont Corp's Dividend Sustainability and Growth
Newmont Corp(NEM, Financial) recently announced a dividend of $0.25 per share, payable on 2024-03-28, with the ex-dividend date set for 2024-03-04. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into Newmont Corps dividend performance and assess its sustainability.
What Does Newmont Corp Do?
Newmont is the world's largest gold miner. It bought Goldcorp in 2019, combined its Nevada mines in a joint venture with competitor Barrick later that year, and also purchased competitor Newcrest in November 2023. Its portfolio includes 17 wholly or majority owned mines and interests in two joint ventures in the Americas, Africa, Australia, and Papua New Guinea. The company is expected to produce roughly 6.9 million ounces of gold in 2024. However, after buying Newcrest, Newmont is likely to sell a number of its higher cost, smaller mines accounting for 20% of forecast sales in 2024. Newmont also produces material amounts of copper, silver, zinc, and lead as byproducts. It had about two decades of gold reserves along with significant byproduct reserves at end December 2023.
A Glimpse at Newmont Corp's Dividend History
Newmont Corp has maintained a consistent dividend payment record since 1986. Dividends are currently distributed on a quarterly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Newmont Corp's Dividend Yield and Growth
As of today, Newmont Corp currently has a 12-month trailing dividend yield of 5.01% and a 12-month forward dividend yield of 3.13%. This suggests an expectation of decreased dividend payments over the next 12 months.
Over the past three years, Newmont Corp's annual dividend growth rate was 15.40%. Extended to a five-year horizon, this rate increased to 33.50% per year. And over the past decade, Newmont Corp's annual dividends per share growth rate stands at an impressive 25.30%.
Based on Newmont Corp's dividend yield and five-year growth rate, the 5-year yield on cost of Newmont Corp stock as of today is approximately 21.24%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-12-31, Newmont Corp's dividend payout ratio is 1.01, which may suggest that the company's dividend may not be sustainable.
Newmont Corp's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Newmont Corp's profitability 6 out of 10 as of 2023-12-31, suggesting fair profitability. The company has reported net profit in 6 years out of the past 10 years.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Newmont Corp's growth rank of 6 out of 10 suggests that the company has a fair growth outlook.
Revenue is the lifeblood of any company, and Newmont Corp's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Newmont Corp's revenue has increased by approximately -0.50% per year on average, a rate that underperforms than approximately 75.86% of global competitors.
The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, Newmont Corp's earnings increased by approximately -16.10% per year on average, a rate that underperforms than approximately 73.13% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 5.60%, which underperforms than approximately 62.59% of global competitors.
Next Steps
In conclusion, while Newmont Corp has demonstrated a strong history of dividend payments with a remarkable growth rate over the years, the current payout ratio and underperforming growth metrics raise questions about the sustainability of future dividends. Investors should consider the company's profitability rank and the potential impact of its strategic decisions, such as the acquisition of Newcrest and the sale of higher-cost mines. With these factors in mind, value investors may want to closely monitor Newmont Corp's financial health and market position before making investment decisions. Can Newmont Corp maintain its dividend attractiveness amidst these challenges? That remains a key question for investors.
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This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
