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Jupiter Mines for Income?

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Question asked 23/04/2021

Jupiter Mines for Income?

Hi MM Team.

Could you give your thoughts on the merits of Jupiter Mines (JMS) as an income-generating investment? They have a 49% holding in a south African manganese mine, which seems to have negotiated the 2020-21 Covid year very well considering the problems with the virus in that part of the world. JMS have an unashamed commitment to high payout levels and a goal of double digit dividend yields. the price of manganese is currently quite low, so maybe with the world (hopefully) pulling out of the covid doldrums, JMS might get a fillip in that area too? Can MM see any merit in JMS as an income stock - or any pitfalls for the unwary?

Keep up the good work!

Answer

Hi Karl,

Base metal stock JMS has indeed rewarded shareholders with healthy dividends over recent years but the stock has fallen while the ASX has rallied nicely. You’re right in terms of high payouts, however they are pinned to earnings which are expected to stay fairly depressed – best guess earnings per share (eps) for FY22 is 4c which is the same amount produced back in 2018.

The obvious pitfalls when buying a commodity stock for income is that earnings are very volatile, and that is certainly the case with JMS. MM doesn’t regard JMS as a quality yield play, more as a “speccy” resources stock which happens to pay a nice yield.

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Jupiter Mines Ltd (JMS)

LAST UPDATED 23/04/2021 11:24

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