A.P. Møller - Mærsk (CPH:MAERSK B) Has Announced That It Will Be Increasing Its Dividend To $1120.00

The board of A.P. Møller - Mærsk A/S (CPH:MAERSK B) has announced that it will be paying its dividend of $1120.00 on the 21st of March, an increased payment from last year's comparable dividend. This takes the annual payment to 8.8% of the current stock price, which unfortunately is below what the industry is paying.

Check out our latest analysis for A.P. Møller - Mærsk

A.P. Møller - Mærsk's Projections Indicate Future Payments May Be Unsustainable

If it is predictable over a long period, even low dividend yields can be attractive. The last dividend was quite easily covered by A.P. Møller - Mærsk's earnings. This indicates that quite a large proportion of earnings is being invested back into the business.

Looking forward, earnings per share is forecast to fall by 81.9% over the next year. If the dividend continues along recent trends, we estimate the payout ratio could reach over 200%, which could put the dividend in jeopardy if the company's earnings don't improve.

Dividend Volatility

The company's dividend history has been marked by instability, with at least one cut in the last 10 years. Since 2015, the annual payment back then was $42.34, compared to the most recent full-year payment of $154.77. This means that it has been growing its distributions at 14% per annum over that time. A.P. Møller - Mærsk has grown distributions at a rapid rate despite cutting the dividend at least once in the past. Companies that cut once often cut again, so we would be cautious about buying this stock solely for the dividend income.

The Dividend Looks Likely To Grow

Given that the dividend has been cut in the past, we need to check if earnings are growing and if that might lead to stronger dividends in the future. It's encouraging to see that A.P. Møller - Mærsk has been growing its earnings per share at 77% a year over the past five years. The company doesn't have any problems growing, despite returning a lot of capital to shareholders, which is a very nice combination for a dividend stock to have.

A.P. Møller - Mærsk Looks Like A Great Dividend Stock

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. The distributions are easily covered by earnings, and there is plenty of cash being generated as well. However, it is worth noting that the earnings are expected to fall over the next year, which may not change the long term outlook, but could affect the dividend payment in the next 12 months. 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. Just as an example, we've come across 2 warning signs for A.P. Møller - Mærsk you should be aware of, and 1 of them is concerning. Is A.P. Møller - Mærsk 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.