The board of MJ Gleeson plc (LON:GLE) has announced that it will be increasing its dividend by 20% on the 4th of April to UK£0.06. Although the dividend is now higher, the yield is only 2.2%, which is below the industry average.
See our latest analysis for MJ Gleeson
MJ Gleeson's Earnings Easily Cover the Distributions
Even a low dividend yield can be attractive if it is sustained for years on end. However, MJ Gleeson's earnings easily cover the dividend. This means that most of what the business earns is being used to help it grow.
Looking forward, earnings per share is forecast to rise by 10.3% over the next year. If the dividend continues along recent trends, we estimate the payout ratio will be 23%, which is in the range that makes us comfortable with the sustainability of the dividend.
Dividend Volatility
Although the company has a long dividend history, it has been cut at least once in the last 10 years. The first annual payment during the last 10 years was UK£0.05 in 2012, and the most recent fiscal year payment was UK£0.15. This implies that the company grew its distributions at a yearly rate of about 12% over that duration. Dividends have grown rapidly over this time, but with cuts in the past we are not certain that this stock will be a reliable source of income in the future.
The Dividend Has Growth Potential
With a relatively unstable dividend, it's even more important to see if earnings per share is growing. MJ Gleeson has impressed us by growing EPS at 8.0% per year over the past five years. A low payout ratio and decent growth suggests that the company is reinvesting well, and it also has plenty of room to increase the dividend over time.
MJ Gleeson Looks Like A Great Dividend Stock
Overall, a dividend increase is always good, and we think that MJ Gleeson is a strong income stock thanks to its track record and growing earnings. Earnings are easily covering distributions, and the company is generating plenty of cash. All in all, this checks a lot of the boxes we look for when choosing an income stock.
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 instance, we've picked out 1 warning sign for MJ Gleeson that investors should take into consideration. Looking for more high-yielding dividend ideas? Try our curated list of strong dividend payers.
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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.
About LSE:GLE
MJ Gleeson
Engages in house building, and land promotion and sale businesses in the United Kingdom.
Flawless balance sheet average dividend payer.
