Mayr-Melnhof Karton (VIE:MMK) Is Paying Out A Larger Dividend Than Last Year

Published
April 28, 2022
WBAG:MMK
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Mayr-Melnhof Karton AG (VIE:MMK) has announced that it will be increasing its dividend on the 11th of May to €3.50. Based on the announced payment, the dividend yield for the company will be 2.1%, which is fairly typical for the industry.

View our latest analysis for Mayr-Melnhof Karton

Mayr-Melnhof Karton's Dividend Is Well Covered By Earnings

We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue. Before making this announcement, Mayr-Melnhof Karton was paying a whopping 327% as a dividend, but this only made up 31% of its overall earnings. While the business may be attempting to set a balanced dividend policy, a cash payout ratio this high might expose the dividend to being cut if the business ran into some challenges.

Over the next year, EPS is forecast to expand by 0.4%. If the dividend continues on this path, the payout ratio could be 32% by next year, which we think can be pretty sustainable going forward.

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WBAG:MMK Historic Dividend April 28th 2022

Dividend Volatility

The company's dividend history has been marked by instability, with at least 1 cut in the last 10 years. Since 2012, the dividend has gone from €2.10 to €3.50. This works out to be a compound annual growth rate (CAGR) of approximately 5.2% a year over that time. We like to see dividends have grown at a reasonable rate, but with at least one substantial cut in the payments, we're not certain this dividend stock would be ideal for someone intending to live on the income.

Mayr-Melnhof Karton Could Grow Its Dividend

With a relatively unstable dividend, it's even more important to evaluate if earnings per share is growing, which could point to a growing dividend in the future. Mayr-Melnhof Karton has seen EPS rising for the last five years, at 8.3% per annum. With a decent amount of growth and a low payout ratio, we think this bodes well for Mayr-Melnhof Karton's prospects of growing its dividend payments in the future.

Our Thoughts On Mayr-Melnhof Karton's Dividend

Overall, this is probably not a great income stock, even though the dividend is being raised at the moment. With cash flows lacking, it is difficult to see how the company can sustain a dividend payment. This company is not in the top tier of income providing stocks.

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 identified 3 warning signs for Mayr-Melnhof Karton (1 is significant!) that you should be aware of before investing. Is Mayr-Melnhof Karton not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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