Manitou BF (EPA:MTU) Is Paying Out Less In Dividends Than Last Year

Manitou BF SA's (EPA:MTU) dividend is being reduced from last year's payment covering the same period to €1.25 on the 18th of June. The dividend yield of 5.9% is still a nice boost to shareholder returns, despite the cut.

We've discovered 2 warning signs about Manitou BF. View them for free.

Manitou BF's Future Dividend Projections Appear Well Covered By Earnings

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. However, Manitou BF's earnings easily cover the dividend. This means that most of what the business earns is being used to help it grow.

Over the next year, EPS is forecast to expand by 7.8%. If the dividend continues on this path, the payout ratio could be 41% by next year, which we think can be pretty sustainable going forward.

View our latest analysis for Manitou BF

Dividend Volatility

The company's dividend history has been marked by instability, with at least one cut in the last 10 years. The dividend has gone from an annual total of €0.35 in 2015 to the most recent total annual payment of €1.25. This implies that the company grew its distributions at a yearly rate of about 14% over that duration. Manitou BF 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's Growth Prospects Are Limited

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. Earnings has been rising at 5.0% per annum over the last five years, which admittedly is a bit slow. While EPS growth is quite low, Manitou BF has the option to increase the payout ratio to return more cash to shareholders.

In Summary

Overall, we think that Manitou BF could make a reasonable income stock, even though it did cut the dividend this year. While the payout ratios are a good sign, we are less enthusiastic about the company's dividend record. 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.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. As an example, we've identified 2 warning signs for Manitou BF that you should be aware of before investing. Is Manitou BF 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.