Maisons du Monde (EPA:MDM) Is Paying Out Less In Dividends Than Last Year

Maisons du Monde S.A. (EPA:MDM) has announced that on 5th of July, it will be paying a dividend of€0.06, which a reduction from last year's comparable dividend. This means that the annual payment is 1.4% of the current stock price, which is lower than what the rest of the industry is paying.

View our latest analysis for Maisons du Monde

Maisons du Monde's Earnings Easily Cover The Distributions

It would be nice for the yield to be higher, but we should also check if higher levels of dividend payment would be sustainable. However, Maisons du Monde's earnings easily cover the dividend. As a result, a large proportion of what it earned was being reinvested back into the business.

Looking forward, earnings per share is forecast to rise exponentially over the next year. Assuming the dividend continues along recent trends, we think the payout ratio will be 7.4%, which makes us pretty comfortable with the sustainability of the dividend.

Maisons du Monde's Dividend Has Lacked Consistency

It's comforting to see that Maisons du Monde has been paying a dividend for a number of years now, however it has been cut at least once in that time. This makes us cautious about the consistency of the dividend over a full economic cycle. The annual payment during the last 7 years was €0.31 in 2017, and the most recent fiscal year payment was €0.06. This works out to a decline of approximately 81% over that time. A company that decreases its dividend over time generally isn't what we are looking for.

Dividend Growth Potential Is Shaky

Given that the track record hasn't been stellar, we really want to see earnings per share growing over time. Earnings per share has been sinking by 30% over the last five years. This steep decline can indicate that the business is going through a tough time, which could constrain its ability to pay a larger dividend each year in the future. It's not all bad news though, as the earnings are predicted to rise over the next 12 months - we would just be a bit cautious until this becomes a long term trend.

In Summary

Overall, it's not great to see that the dividend has been cut, but this might be explained by the payments being a bit high previously. In the past, the payments have been unstable, but over the short term the dividend could be reliable, with the company generating enough cash to cover it. We don't think Maisons du Monde is a great stock to add to your portfolio if income is your focus.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. However, there are other things to consider for investors when analysing stock performance. For example, we've picked out 3 warning signs for Maisons du Monde that investors should know about before committing capital to this stock. Is Maisons du Monde not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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