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Nornickel Will Pay A Dividend Yield Of 10% For 10 Years

Published Sun, 28 Jun 2020 15:54:38 -0400 on Seeking Alpha

Seeking AlphaLong Ideas | Industrial  | RussiaNornickel Will Pay A Dividend Yield Of 10% For 10 YearsJun. 28, 2020 3:54 PM ET|| About: Public Joint Stock Company Mining and Metallurgical Company Norilsk Nickel (NILSY)by: Aleksandr SayganovAleksandr Sayganov Special situations, long/short equity, medium-term horizon, research analystSummaryThe company is currently trading with high FTM dividend yield (10-11%).
Output can grow by 30% in the next ten years.
Nornickel will benefit from the commodities super cycle and palladium.
Norilsk Nickel (OTCPK: NILSY) (Nornickel) is a large miner of precious metals that earns enough revenue to pay 10-11% of the yield and has growth projects, due to which the dividend will grow over a period of 10 years. Furthermore, Nornickel’s metal basket has growth potential, and if you believe in an inflationary economic recovery, Nornickel is a good bet for the long term. I recommend that you BUY at prices below $29/share.
Nornickel is one of the largest precious and base metals miners with the headquarters being located in Russia. It is the world’s largest palladium and high-grade nickel producer. The main produced metals are palladium, nickel, copper, platinum and gold.

Source: Nornickel’s databook
The company is currently trading with high FTM dividend yield
The current dividend policy (page 76) sets a dividend payout at 60% of the EBITDA. The dividends for the year 2019 were $3 per share (11% dividend yield to the current price).
If we consider the revenue from metal sales with spot prices and actual production guidance, we will see a 6.5% growth in 2020.

Source: Nornickel’s databook, Nornickel’s Investor presentation, my projections
The company will benefit from ruble to USD depreciation (it is 68 on the spot with an average of 63 in 2019), because it has ruble-denominated costs. I projected costs for 2020 by indexing various cost items for output, inflation, and currency rate changes,... Read more