Readers hoping to buy Endeavour Mining plc (TSE:EDV) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. The ex-dividend date is usually set to be two business days before the record date, which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the dividend. The ex-dividend date is important as the process of settlement involves at least two full business days. So if you miss that date, you would not show up on the company's books on the record date. This means that investors who purchase Endeavour Mining's shares on or after the 14th of March will not receive the dividend, which will be paid on the 15th of April.

The company's upcoming dividend is US$0.57 a share, following on from the last 12 months, when the company distributed a total of US$1.14 per share to shareholders. Last year's total dividend payments show that Endeavour Mining has a trailing yield of 5.3% on the current share price of CA$30.79. If you buy this business for its dividend, you should have an idea of whether Endeavour Mining's dividend is reliable and sustainable. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.

Check out our latest analysis for Endeavour Mining

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Endeavour Mining's dividend is not well covered by earnings, as the company lost money last year. This is not a sustainable state of affairs, so it would be worth investigating if earnings are expected to recover. Considering the lack of profitability, we also need to check if the company generated enough cash flow to cover the dividend payment. If cash earnings don't cover the dividend, the company would have to pay dividends out of cash in the bank, or by borrowing money, neither of which is long-term sustainable. Over the last year, it paid out more than three-quarters (78%) of its free cash flow generated, which is fairly high and may be starting to limit reinvestment in the business.

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.TSX:EDV Historic Dividend March 9th 2025

Have Earnings And Dividends Been Growing?

Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. If earnings fall far enough, the company could be forced to cut its dividend. Endeavour Mining was unprofitable last year, but at least the general trend suggests its earnings have been improving over the past five years. Even so, an unprofitable company whose business does not quickly recover is usually not a good candidate for dividend investors.

Story Continues

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Endeavour Mining has delivered an average of 11% per year annual increase in its dividend, based on the past four years of dividend payments. We're glad to see dividends rising alongside earnings over a number of years, which may be a sign the company intends to share the growth with shareholders.

Remember, you can always get a snapshot of Endeavour Mining's financial health, by checking our visualisation of its financial health, here.

The Bottom Line

Is Endeavour Mining an attractive dividend stock, or better left on the shelf? First, it's not great to see the company paying a dividend despite being loss-making over the last year. On the plus side, the dividend was covered by free cash flow." It's not that we think Endeavour Mining is a bad company, but these characteristics don't generally lead to outstanding dividend performance.

Although, if you're still interested in Endeavour Mining and want to know more, you'll find it very useful to know what risks this stock faces. For example, we've found 1 warning sign for Endeavour Mining that we recommend you consider before investing in the business.

A common investing mistake is buying the first interesting stock you see. Here you can find a full list of high-yield dividend stocks.

Have feedback on this article? Concerned about the content?Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.

View Comments