The board of M.P. Evans Group PLC ( LON:MPE ) has announced that it will pay a dividend of £0.125 per share on the 3rd of November. Based on this payment, the dividend yield on the company's stock will be 5.6%, which is an attractive boost to shareholder returns.
View our latest analysis for M.P. Evans Group
M.P. Evans Group's Dividend Is Well Covered By Earnings
A big dividend yield for a few years doesn't mean much if it can't be sustained. Prior to this announcement, M.P. Evans Group was quite comfortably covering its dividend with earnings and it was paying more than 75% of its free cash flow to shareholders. By paying out so much of its cash flows, this could indicate that the company has limited opportunities for investment and growth.
The next year is set to see EPS grow by 56.4%. Assuming the dividend continues along recent trends, we think the payout ratio could be 37% by next year, which is in a pretty sustainable range.
Dividend Volatility
The company has been growing its distributions at 16% per annum over that time. It is great to see strong growth in the dividend payments.
The Dividend Looks Likely To Grow
It's encouraging to see that M.P. Evans Group has been growing its earnings per share at 24% a year over the past five years. The company's earnings per share has grown rapidly in recent years, and it has a good balance between reinvesting and paying dividends to shareholders, so we think that M.P. Evans Group could prove to be a strong dividend payer.
In Summary
In summary, while it's good to see that the dividend hasn't been cut, we would be a touch cautious of relying on this stock primarily for the dividend income.
Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. However, there are other things to consider for investors when analysing stock performance. For example, we've picked out 2 warning signs for M.P. Evans Group that investors should know about before committing capital to this stock. Is M.P. Evans Group 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.
About AIM:MPE
M.P. Evans Group
Through its subsidiaries, engages in the ownership and development of oil palm plantations in Indonesia and Malaysia.
Very undervalued with flawless balance sheet and pays a dividend.
