MFF Capital Investments (ASX:MFF) Is Increasing Its Dividend To A$0.07

MFF Capital Investments Limited's (ASX:MFF) dividend will be increasing from last year's payment of the same period to A$0.07 on 1st of November. This takes the annual payment to 3.6% of the current stock price, which is about average for the industry.

Check out our latest analysis for MFF Capital Investments

MFF Capital Investments' Dividend Is 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. 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. If the dividend continues on this path, the payout ratio could be 18% by next year, which we think can be pretty sustainable going forward.

MFF Capital Investments Has A Solid Track Record

The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. Since 2014, the dividend has gone from A$0.02 total annually to A$0.14. This means that it has been growing its distributions at 21% per annum over that time. It is good to see that there has been strong dividend growth, and that there haven't been any cuts for a long time.

The Dividend Looks Likely To Grow

The company's investors will be pleased to have been receiving dividend income for some time. We are encouraged to see that MFF Capital Investments has grown earnings per share at 14% per year over the past five years. A low payout ratio and decent growth suggests that the company is reinvesting well, and it also has plenty of room to increase the dividend over time.

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. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All in all, this checks a lot of the boxes we look for when choosing an income stock.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. However, there are other things to consider for investors when analysing stock performance. You can also discover whether shareholders are aligned with insider interests by checking our visualisation of insider shareholdings and trades 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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