Marsh & McLennan Companies, Inc. (NYSE:MMC) is about to trade ex-dividend in the next 3 days. Investors can purchase shares before the 28th of January in order to be eligible for this dividend, which will be paid on the 14th of February.
Marsh & McLennan Companies’s next dividend payment will be US$0.46 per share. Last year, in total, the company distributed US$1.82 to shareholders. Looking at the last 12 months of distributions, Marsh & McLennan Companies has a trailing yield of approximately 1.6% on its current stock price of $114.23. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. As a result, readers should always check whether Marsh & McLennan Companies has been able to grow its dividends, or if the dividend might be cut.
See our latest analysis for Marsh & McLennan Companies
Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. Marsh & McLennan Companies paid out more than half (59%) of its earnings last year, which is a regular payout ratio for most companies.
When a company paid out less in dividends than it earned in profit, this generally suggests its dividend is affordable. The lower the % of its profit that it pays out, the greater the margin of safety for the dividend if the business enters a downturn.
Click here to see the company’s payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Businesses with strong growth prospects usually make the best dividend payers, because it’s easier to grow dividends when earnings per share are improving. If earnings fall far enough, the company could be forced to cut its dividend. This is why it’s a relief to see Marsh & McLennan Companies earnings per share are up 3.8% per annum over the last five years.
Another key way to measure a company’s dividend prospects is by measuring its historical rate of dividend growth. Since the start of our data, ten years ago, Marsh & McLennan Companies has lifted its dividend by approximately 8.6% a year on average. We’re glad to see dividends rising alongside earnings over a number of years, which may be a sign the company intends to share the growth with shareholders.
Final Takeaway
Is Marsh & McLennan Companies an attractive dividend stock, or better left on the shelf? Marsh & McLennan Companies has been generating some growth in earnings per share while paying out more than half of its earnings to shareholders in the form of dividends. We think there are likely better opportunities out there.
Wondering what the future holds for Marsh & McLennan Companies? See what the 15 analysts we track are forecasting, with this visualisation of its historical and future estimated earnings and cash flow
We wouldn’t recommend just buying the first dividend stock you see, though. Here’s a list of interesting dividend stocks with a greater than 2% yield and an upcoming dividend.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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