ANGLOGOLD ASHANTI PLC (NYSE:AU) – A High-Yield Dividend Stock with Strong Financials and Growth Potential

Dividend investors often look for a balance between high yield, sustainability, and financial stability. One way to find such stocks is by using a screening method that selects companies with strong dividend ratings while keeping solid profitability and financial health. This approach helps avoid high-yield traps, stocks with unsustainable payouts due to underlying financial weakness. ANGLOGOLD ASHANTI PLC (NYSE:AU) appears as a candidate from this screen, offering a good mix of yield, growth potential, and financial strength.

Key Dividend Metrics

AU stands out for several reasons that fit dividend investment criteria:

• Attractive Dividend Yield (5.51%)
  AU’s yield is almost double the industry average (2.85%) and much higher than the S&P 500’s 2.39%. This places it in the top 6% of its metals and mining peers for yield. High yields can sometimes indicate trouble, but AU’s payout ratio of 39.6% suggests sustainability, as it leaves enough room to reinvest earnings or handle downturns.

• Strong Dividend Growth (59.59% CAGR over 5 years)
  While past growth is notable, investors should be aware that AU recently cut its dividend. However, its 10-year history of steady payouts adds trust. Dividend growth is important for long-term investors, as it helps counter inflation and builds returns over time.

• Sustainable Payouts
  The payout ratio is well below the danger zone (typically >80%), and AU’s strong free cash flow further supports dividend reliability. The company’s ability to generate cash, shown by a debt-to-FCF ratio of just 1.31 (better than 86% of peers), means it can easily cover obligations.

Profitability and Financial Health

Dividend sustainability depends on a company’s ability to generate profits and maintain a strong balance sheet. AU does well here:

• High Profitability (Rating: 9/10)
  AU’s return on invested capital (19.74%) and profit margins (22.2% net, 35% operating) rank in the top 10% of its industry. These numbers show efficient operations and pricing power, which are key for funding dividends.

• Solid Financial Health (Rating: 8/10)
  With a low debt-to-equity ratio (0.29) and strong liquidity (current ratio of 2.99), AU is prepared to handle market downturns. Its Altman-Z score (4.88) signals low bankruptcy risk, an important factor for dividend stability.

Valuation and Growth

AU trades at a P/E of 16.4, below both its industry (26.2) and the S&P 500 (26.7). Its forward P/E of 11.8 suggests potential upside if earnings meet expectations. While near-term EPS growth is expected to drop (-1.98% annually), revenue is projected to grow at 8.3%, providing a base for future dividend increases.

Why These Criteria Matter

The screening method focuses on:

1. High Dividend Rating: Ensures yield and growth potential.
2. Profitability: Confirms earnings can support payouts.
3. Financial Health: Reduces risk of dividend cuts during market stress.

AU meets all three, making it a candidate for investors seeking income with moderate risk. For more details, review AU’s full fundamental analysis report.

Exploring Further

To find more stocks like AU, check the Best Dividend Stocks screen, which filters for high dividend ratings alongside profitability and health metrics.

Disclaimer: This article is not investment advice. Conduct your own research or consult a financial advisor before making investment decisions.