Southern Copper Corporation (NYSE:SCCO) has announced that it will be increasing its dividend from last year's comparable payment on the 4th of September to $0.80. This will take the annual payment to 3.5% of the stock price, which is above what most companies in the industry pay.

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Southern Copper's Payment Could Potentially Have Solid Earnings Coverage

A big dividend yield for a few years doesn't mean much if it can't be sustained. The last dividend was quite easily covered by Southern Copper's earnings. This indicates that a lot of the earnings are being reinvested into the business, with the aim of fueling growth.

Over the next year, EPS is forecast to expand by 16.5%. Assuming the dividend continues along recent trends, we think the payout ratio could be 66% by next year, which is in a pretty sustainable range.

NYSE:SCCO Historic Dividend August 3rd 2025

Check out our latest analysis for Southern Copper

Dividend Volatility

The company's dividend history has been marked by instability, with at least one cut in the last 10 years. The annual payment during the last 10 years was $0.442 in 2015, and the most recent fiscal year payment was $3.20. This implies that the company grew its distributions at a yearly rate of about 22% over that duration. Southern Copper has grown distributions at a rapid rate despite cutting the dividend at least once in the past. Companies that cut once often cut again, so we would be cautious about buying this stock solely for the dividend income.

The Dividend Looks Likely To Grow

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. We are encouraged to see that Southern Copper has grown earnings per share at 25% per year over the past five years. Southern Copper is clearly able to grow rapidly while still returning cash to shareholders, positioning it to become a strong dividend payer in the future.

We Really Like Southern Copper's Dividend

Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. Earnings are easily covering distributions, and the company is generating plenty of cash. All of these factors considered, we think this has solid potential as a dividend stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For example, we've picked out 1 warning sign for Southern Copper that investors should know about before committing capital to this stock. Is Southern Copper not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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