Franco-Nevada Corp's Dividend Analysis
Understanding Franco-Nevada Corp's Dividend Performance and Sustainability
Franco-Nevada Corp (NYSE:FNV) recently announced a dividend of $0.36 per share, payable on 2024-03-28, with the ex-dividend date set for 2024-03-13. 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 Franco-Nevada Corp's dividend performance and assess its sustainability.
What Does Franco-Nevada Corp Do?
This Powerful Chart Made Peter Lynch 29% A Year For 13 Years
How to calculate the intrinsic value of a stock?
Franco-Nevada Corp is a precious-metals-focused royalty and investment company. The company owns a diversified portfolio of precious metals and royalty streams, which is actively managed to generate the bulk of its revenue from gold, silver, and platinum. The company does not operate mines, develop projects, or conduct exploration. Franco-Nevada's short-term financial performance is linked to the price of commodities and the amount of production from its portfolio of producing assets. Its long-term performance is affected by the availability of exploration and development capital. The company holds a portfolio of assets, diversified by commodity, revenue type, and stage of a project, primarily located in the US, Canada, and Australia.
A Glimpse at Franco-Nevada Corp's Dividend History
Franco-Nevada Corp has maintained a consistent dividend payment record since 2008. Dividends are currently distributed on a quarterly basis. Franco-Nevada Corp has increased its dividend each year since 2008. The stock is thus listed as a dividend achiever, an honor that is given to companies that have increased their dividend each year for at least the past 16 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Franco-Nevada Corp's Dividend Yield and Growth
As of today, Franco-Nevada Corp currently has a 12-month trailing dividend yield of 1.19% and a 12-month forward dividend yield of 1.27%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, Franco-Nevada Corp's annual dividend growth rate was 10.10%. Extended to a five-year horizon, this rate decreased to 6.50% per year. And over the past decade, Franco-Nevada Corp's annual dividends per share growth rate stands at 8.80%. Based on Franco-Nevada Corp's dividend yield and five-year growth rate, the 5-year yield on cost of Franco-Nevada Corp stock as of today is approximately 1.63%.
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 2023-09-30, Franco-Nevada Corp's dividend payout ratio is 0.38.
Franco-Nevada Corp's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Franco-Nevada Corp's profitability 9 out of 10 as of 2023-09-30, suggesting good profitability prospects. The company has reported positive net income for each of year over the past decade, further solidifying its high profitability.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Franco-Nevada Corp's growth rank of 9 out of 10 suggests that the company's growth trajectory is good relative to its competitors.
Revenue is the lifeblood of any company, and Franco-Nevada Corp's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Franco-Nevada Corp's revenue has increased by approximately 16.20% per year on average, a rate that outperforms approximately 61.71% 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, Franco-Nevada Corp's earnings increased by approximately 27.40% per year on average, a rate that outperforms approximately 73.99% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 34.60%, which outperforms approximately 86.17% of global competitors, speaks volumes about its operational efficiency and profitability.
Next Steps
Considering Franco-Nevada Corp's consistent dividend payments, robust dividend growth rate, prudent payout ratio, strong profitability, and solid growth metrics, the company presents as a compelling option for value investors focused on dividend income. With its financial health and industry position, Franco-Nevada Corp seems well-equipped to maintain its dividend achiever status. Will this gold-focused royalty company continue to shine in the portfolios of dividend investors? For those interested in exploring further, GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
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.
This article first appeared on GuruFocus.
