MFF Capital Investments' (ASX:MFF) Dividend Will Be Increased To A$0.09

MFF Capital Investments Limited's (ASX:MFF) dividend will be increasing from last year's payment of the same period to A$0.09 on 31st of October. This takes the annual payment to 3.9% of the current stock price, which is about average for the industry.

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MFF Capital Investments' Future Dividend Projections Appear Well Covered By Earnings

We aren't too impressed by dividend yields unless they can be sustained over time. However, prior to this announcement, MFF Capital Investments' dividend was comfortably covered by both cash flow and earnings. As a result, a large proportion of what it earned was being reinvested back into the business.

Looking forward, earnings per share could rise by 74.1% over the next year if the trend from the last few years continues. If the dividend continues along recent trends, we estimate the payout ratio will be 16%, which is in the range that makes us comfortable with the sustainability of the dividend.

View our latest analysis for MFF Capital Investments

MFF Capital Investments Has A Solid Track Record

The company has an extended history of paying stable dividends. The annual payment during the last 10 years was A$0.02 in 2015, and the most recent fiscal year payment was A$0.18. This works out to be a compound annual growth rate (CAGR) of approximately 25% a year over that time. We can see that payments have shown some very nice upward momentum without faltering, which provides some reassurance that future payments will also be reliable.

The Dividend Looks Likely To Grow

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. MFF Capital Investments has impressed us by growing EPS at 74% per year over the past five years. Rapid earnings growth and a low payout ratio suggest this company has been effectively reinvesting in its business. Should that continue, this company could have a bright future.

We Really Like MFF Capital Investments' Dividend

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. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. 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. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. See if management have their own wealth at stake, by checking insider shareholdings in MFF Capital Investments stock. If you are a dividend investor, you might also want to look at our curated list of high yield 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.