Our analysis is based on comparing Dominion Diamond Corp. with the following peers – Mountain Province Diamonds Inc., Lucara Diamond Corp., Tiffany & Co. and Signet Jewelers Limited (MPVD-US, LUC-CA, TIF-US and SIG-US).
Dominion Diamond Corp.’s dividend yield is 3.05 percent and its dividend payout is 18,293.23 percent. This compares to a peer median dividend yield of 2.51 percent and a payout level of 44.49 percent. This type of dividend performance might make it a good stock for dividend investors. However, the company’s average dividend quality score of 42 out of a possible score of 100, points to some weakness in the sustainability of its robust payout ratio, and makes its less attractive for dividend investors seeking current income.
Dividend Quality Overview
- Over the last twelve months (prior to January 31, 2017), DDC-US paid a low quality dividend, which represents a yield of 3.07% at the current price.
- Dividends were paid for 2 of the last five years — all of them were also of low quality.
- The ending cash balance, with a dividend coverage of 4.01x, provides a substantial cushion in case of a significant reduction of cash flows in the future.
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Over the last twelve months (prior to January 31, 2017), DDC-US paid a low quality dividend.
The source of the company’s cash to support the dividend paid over the last twelve months is operating cash flow (coverage of 3.44x), investing cash flow (coverage of -6.38x), issuance cash flow (coverage of -1.54x) and twelve-month prior cash (coverage of 9.44x), for a total dividend coverage of 5.01x.
DDC-US‘s issuance cash flow includes outflows from net debt repayment (coverage of -0.69x) and net share buybacks (coverage of -0.91x). Thus, the total coverage including share buybacks is 5.93x, which reflects our assumption that the cash paid for share buybacks is discretionary and could instead be used to pay dividends.
These coverage ratio factors imply that the firm had to dip into the beginning cash balance to pay the dividend, which suggests a low dividend quality.
|Dividend Yield (%)||0||0||0||5.64||4.14||3.05|
|Dividend Payout (%)||0||0||68.72||-100.23||18293.23||18293.23|
A complete list of metrics and analysis is available on the company page.
Dominion Diamond Corp. engages in the mining and marketing of rough diamonds. It operates through three reportable segments: Diavik Diamond Mine, Ekati Diamond Mine and Corporate. The Diavik Diamond Mine segment includes the production, sorting and sale of rough diamonds from the Diavik Diamond Mine. The Corporate segment captures costs not specifically related to operating the Diavik and Ekati mines. The company was founded by David Grenville Thomas on April 19, 1994 and is headquartered in Yellowknife, Canada.
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