MPS' (NSE:MPSLTD) Upcoming Dividend Will Be Larger Than Last Year's
MPS Limited's (NSE:MPSLTD) dividend will be increasing from last year's payment of the same period to ₹50.00 on 28th of September. This takes the dividend yield to 3.5%, which shareholders will be pleased with.
MPS' Payment Could Potentially Have Solid Earnings Coverage
A big dividend yield for a few years doesn't mean much if it can't be sustained. Before making this announcement, MPS was paying out quite a large proportion of both earnings and cash flow, with the dividend being 153% of cash flows. Paying out such a high proportion of cash flows can expose the business to needing to cut the dividend if the business runs into some challenges.
EPS is set to grow by 24.4% over the next year if recent trends continue. If recent patterns in the dividend continue, the payout ratio in 12 months could be 81% which is a bit high but can definitely be sustainable.
View our latest analysis for MPS
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 ₹24.00 in 2015 to the most recent total annual payment of ₹83.00. This implies that the company grew its distributions at a yearly rate of about 13% over that duration. It is great to see strong growth in the dividend payments, but cuts are concerning as it may indicate the payout policy is too ambitious.
MPS' Dividend Might Lack Growth
Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. We are encouraged to see that MPS has grown earnings per share at 24% per year over the past five years. However, MPS isn't reinvesting a lot back into the business, so we wonder how quickly it will be able to grow in the future.
The Dividend Could Prove To Be Unreliable
Overall, we always like to see the dividend being raised, but we don't think MPS will make a great income stock. In general, the distributions are a little bit higher than we would like, but we can't ignore the fact the quickly growing earnings gives this stock great potential in the future. We would probably look elsewhere for an income investment.
Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Case in point: We've spotted 2 warning signs for MPS (of which 1 is significant!) you should know about. If you are a dividend investor, you might also want to look at our curated list of high yield 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 NSEI:MPSLTD
MPS
Provides platforms and services for content creation, full-service production, and distribution to the publishers, learning companies, corporate institutions, libraries, and content aggregators in India, Europe, the United States, and internationally.
Outstanding track record with flawless balance sheet.
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