Moelis Australia Limited (ASX:MOE) Looks Like A Good Stock, And It's Going Ex-Dividend Soon

It looks like Moelis Australia Limited (ASX:MOE) is about to go ex-dividend in the next day or two. You will need to purchase shares before the 23rd of February to receive the dividend, which will be paid on the 3rd of March.

Moelis Australia's next dividend payment will be AU$0.10 per share, on the back of last year when the company paid a total of AU$0.10 to shareholders. Looking at the last 12 months of distributions, Moelis Australia has a trailing yield of approximately 2.2% on its current stock price of A$4.56. If you buy this business for its dividend, you should have an idea of whether Moelis Australia's dividend is reliable and sustainable. We need to see whether the dividend is covered by earnings and if it's growing.

Check out our latest analysis for Moelis Australia

Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. Moelis Australia is paying out an acceptable 54% of its profit, a common payout level among most companies.

Companies that pay out less in dividends than they earn in profits generally have more sustainable dividends. The lower the payout ratio, the more wiggle room the business has before it could be forced to cut the dividend.

Click here to see how much of its profit Moelis Australia paid out over the last 12 months.

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 decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. Fortunately for readers, Moelis Australia's earnings per share have been growing at 14% a year for the past five years.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Moelis Australia has delivered 13% dividend growth per year on average over the past three years. It's exciting to see that both earnings and dividends per share have grown rapidly over the past few years.

The Bottom Line

From a dividend perspective, should investors buy or avoid Moelis Australia? Moelis Australia has an acceptable payout ratio and its earnings per share have been improving at a decent rate. We think this is a pretty attractive combination, and would be interested in investigating Moelis Australia more closely.

In light of that, while Moelis Australia has an appealing dividend, it's worth knowing the risks involved with this stock. Our analysis shows 2 warning signs for Moelis Australia that we strongly recommend you have a look at before investing in the company.

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.

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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. 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.
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