Martinrea International (TSE:MRE) Has Affirmed Its Dividend Of CA$0.05

The board of Martinrea International Inc. (TSE:MRE) has announced that it will pay a dividend on the 15th of October, with investors receiving CA$0.05 per share. This means the annual payment will be 1.5% of the current stock price, which is lower than the industry average.

View our latest analysis for Martinrea International

Martinrea International's Dividend Is Well Covered By Earnings

The dividend yield is a little bit low, but sustainability of the payments is also an important part of evaluating an income stock. Before making this announcement, Martinrea International was easily earning enough to cover the dividend. As a result, a large proportion of what it earned was being reinvested back into the business.

The next year is set to see EPS grow by 105.8%. Assuming the dividend continues along recent trends, we think the payout ratio could be 4.7% by next year, which is in a pretty sustainable range.

Martinrea International Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. Since 2013, the annual payment back then was CA$0.12, compared to the most recent full-year payment of CA$0.20. This means that it has been growing its distributions at 5.2% per annum over that time. Companies like this can be very valuable over the long term, if the decent rate of growth can be maintained.

The Dividend's Growth Prospects Are Limited

Investors could be attracted to the stock based on the quality of its payment history. Although it's important to note that Martinrea International's earnings per share has basically not grown from where it was five years ago, which could erode the purchasing power of the dividend over time. If Martinrea International is struggling to find viable investments, it always has the option to increase its payout ratio to pay more to shareholders.

We Really Like Martinrea International's Dividend

In summary, it is good to see that the dividend is staying consistent, and we don't think there is any reason to suspect this might change over the medium term. Earnings are easily covering distributions, and the company is generating plenty of cash. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. However, there are other things to consider for investors when analysing stock performance. As an example, we've identified 1 warning sign for Martinrea International that you should be aware of before investing. Is Martinrea International not quite the opportunity you were looking for? Why not check out our selection of top 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.