Cementos Molins' (BDM:CMO) Shareholders Will Receive A Bigger Dividend Than Last Year

Cementos Molins, S.A. (BDM:CMO) will increase its dividend from last year's comparable payment on the 17th of July to €0.4212. This takes the dividend yield to 4.8%, which shareholders will be pleased with.

Check out our latest analysis for Cementos Molins

Cementos Molins' Earnings Easily Cover The Distributions

If the payments aren't sustainable, a high yield for a few years won't matter that much. Before making this announcement, Cementos Molins was paying a whopping 290% as a dividend, but this only made up 38% of its overall earnings. While the business may be attempting to set a balanced dividend policy, a cash payout ratio this high might expose the dividend to being cut if the business ran into some challenges.

Over the next year, EPS could expand by 14.3% if recent trends continue. If the dividend continues on this path, the payout ratio could be 29% by next year, which we think can be pretty sustainable going forward.

Cementos Molins Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. Since 2014, the annual payment back then was €0.14, compared to the most recent full-year payment of €1.04. This works out to be a compound annual growth rate (CAGR) of approximately 22% a year over that time. Rapidly growing dividends for a long time is a very valuable feature for an income stock.

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. We are encouraged to see that Cementos Molins has grown earnings per share at 14% per year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for Cementos Molins' prospects of growing its dividend payments in the future.

In Summary

Overall, we always like to see the dividend being raised, but we don't think Cementos Molins will make a great income stock. While Cementos Molins is earning enough to cover the payments, the cash flows are lacking. We don't think Cementos Molins is a great stock to add to your portfolio if income is your focus.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For example, we've picked out 1 warning sign for Cementos Molins that investors should know about before committing capital to this stock. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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