The board of MFF Capital Investments Limited (ASX:MFF) has announced that it will be paying its dividend of A$0.07 on the 1st of November, an increased payment from last year’s comparable dividend. The payment will take the dividend yield to 3.6%, which is in line with the average for the industry.
Check out our latest analysis for MFF Capital Investments
MFF Capital Investments’ Dividend Is Well Covered By Earnings
Unless the payments are sustainable, the dividend yield doesn’t mean too much. However, prior to this announcement, MFF Capital Investments’ dividend was comfortably covered by both cash flow and earnings. This means that most of what the business earns is being used to help it grow.
Over the next year, EPS could expand by 13.8% if recent trends continue. Assuming the dividend continues along recent trends, we think the payout ratio could be 18% by next year, which is in a pretty sustainable range.
MFF Capital Investments Has A Solid Track Record
Even over a long history of paying dividends, the company’s distributions have been remarkably stable. Since 2014, the annual payment back then was A$0.02, compared to the most recent full-year payment of A$0.14. This works out to be a compound annual growth rate (CAGR) of approximately 21% a year over that time. Rapidly growing dividends for a long time is a very valuable feature for an income stock.
The Dividend Looks Likely To Grow
Some investors will be chomping at the bit to buy some of the company’s stock based on its dividend history. MFF Capital Investments has impressed us by growing EPS at 14% per year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for MFF Capital Investments’ prospects of growing its dividend payments in the future.
MFF Capital Investments Looks Like A Great Dividend Stock
Overall, a dividend increase is always good, and we think that MFF Capital Investments is a strong income stock thanks to its track record and growing earnings. Earnings are easily covering distributions, and the company is generating plenty of cash. Taking this all into consideration, this looks like it could be a good dividend opportunity.
Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. See if management have their own wealth at stake, by checking insider shareholdings in MFF Capital Investments stock. Is MFF Capital Investments not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
