Miquel y Costas & Miquel (BME:MCM) Will Pay A Dividend Of €0.0923

Miquel y Costas & Miquel, S.A. (BME:MCM) has announced that it will pay a dividend of €0.0923 per share on the 16th of October. The payment will take the dividend yield to 3.4%, which is in line with the average for the industry.

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Miquel y Costas & Miquel's Payment Could Potentially Have Solid Earnings Coverage

We aren't too impressed by dividend yields unless they can be sustained over time. However, Miquel y Costas & Miquel's earnings easily cover the dividend. This means that most of its earnings are being retained to grow the business.

If the trend of the last few years continues, EPS will grow by 3.3% over the next 12 months. If the dividend continues on this path, the payout ratio could be 34% by next year, which we think can be pretty sustainable going forward.

View our latest analysis for Miquel y Costas & Miquel

Miquel y Costas & Miquel's Dividend Has Lacked Consistency

Miquel y Costas & Miquel has been paying dividends for a while, but the track record isn't stellar. If the company cuts once, it definitely isn't argument against the possibility of it cutting in the future. The dividend has gone from an annual total of €0.212 in 2017 to the most recent total annual payment of €0.481. This implies that the company grew its distributions at a yearly rate of about 11% over that duration. Miquel y Costas & Miquel 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.

Miquel y Costas & Miquel May Find It Hard To Grow The Dividend

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. Earnings per share has been crawling upwards at 3.3% per year. While EPS growth is quite low, Miquel y Costas & Miquel has the option to increase the payout ratio to return more cash to shareholders.

In Summary

Overall, this is a reasonable dividend, and it being raised is an added bonus. The payout ratio looks good, but unfortunately the company's dividend track record isn't stellar. This looks like it could be a good dividend stock going forward, but we would note that the payout ratio has been at higher levels in the past so it could happen again.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. To that end, Miquel y Costas & Miquel has 2 warning signs (and 1 which is a bit concerning) we think you should know about. Is Miquel y Costas & Miquel 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.