For dividend focussed investors, earnings season provides an important snapshot of how dividend stocks are performing.
According to a new report from Bell Potter, there is one dividend stock in particular that investors should be aware of.
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Why earnings season matters for income investors
Earnings season is an especially important time for dividend investors because a company's results can reveal far more than just whether it beat or missed analysts' expectations.
For income-focused investors, earnings reports provide a fresh look at the strength of the business, the sustainability of its cash flow, and, ultimately, its ability to keep paying and growing its dividend.
While dividend announcements often get the most attention, the numbers behind them matter just as much.
Revenue and profit trends, free cash flow, debt levels, and management's outlook can all provide clues about whether a company has the financial capacity to maintain its payout through different economic conditions.
Why this dividend stock stands out
For investors looking to add a dividend stock to their portfolio, Regis Resources Ltd (ASX: RRL) is worth considering.
Regis Resources is an established multi-mine gold producer and one of the largest ASX-listed gold producers with an all-Australian asset base.
It released full-year results last Friday, which included a record net profit after tax of $715 million.
This ASX gold stock has now risen more than 100% over the last year.
Even more importantly for dividend investors, it declared fully franked final dividends of 20 cents per share, including a 5 cent special dividend.
According to Bell Potter, the record distributions reflect the implementation of Regis' new dividend policy.
The policy targets a payout between 25% and 50% of the "Group Cash Increase" over the preceding half-year (cash and bullion increase net of dividends and tax). For FY26, this ratio was 39%, equating to a fully franked 4.3% yield.
Capital growth also a factor
While strong yields are great news for dividend stocks, some can provide the exciting combination of passive income and capital growth.
That appears to be the case for Regis Resources.
Bell Potter has upgraded its price target on this dividend stock to $9.35 (previously $8.45).
The broker also has a buy recommendation.
From yesterday's closing price, this indicates an upside potential of 10% to go alongside the yield fetching over 4%.
While this lifts operating costs it also increases gold price leverage and Resource value extraction. Free cash flows continue to support dividends and the capacity to pursue both organic and inorganic growth options.
Overall, we remain positive towards RRL's all-Australian, multi-mine asset portfolio, its leverage to the gold price and its fully unhedged, debt free balance sheet. Our NPV-based valuation lifts 11%, to $9.35/sh. We retain our Buy recommendation.
