Wal-Mart de México. de (BMV:WALMEX) Has Announced That It Will Be Increasing Its Dividend To MX$1.09

Wal-Mart de México, S.A.B. de C.V. (BMV:WALMEX) will increase its dividend from last year's comparable payment on the 10th of December to MX$1.09. This takes the dividend yield to 3.9%, which shareholders will be pleased with.

Check out our latest analysis for Wal-Mart de México. de

Wal-Mart de México. de's Future Dividend Projections Appear Well Covered By Earnings

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. But before making this announcement, Wal-Mart de México. de's earnings quite easily covered the dividend. The business is returning a large chunk of its cash to shareholders, which means it is not being used to grow the business.

Over the next year, EPS is forecast to expand by 35.7%. If the dividend continues along recent trends, we estimate the payout ratio will be 56%, which is in the range that makes us comfortable with the sustainability of the dividend.

Dividend Volatility

The company's dividend history has been marked by instability, with at least one cut in the last 10 years. Since 2014, the annual payment back then was MX$1.38, compared to the most recent full-year payment of MX$2.17. This implies that the company grew its distributions at a yearly rate of about 4.6% over that duration. Modest growth in the dividend is good to see, but we think this is offset by historical cuts to the payments. It is hard to live on a dividend income if the company's earnings are not consistent.

We Could See Wal-Mart de México. de's Dividend Growing

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. Wal-Mart de México. de has seen EPS rising for the last five years, at 6.9% per annum. With a decent amount of growth and a low payout ratio, we think this bodes well for Wal-Mart de México. de's prospects of growing its dividend payments in the future.

Our Thoughts On Wal-Mart de México. de's Dividend

Overall, we always like to see the dividend being raised, but we don't think Wal-Mart de México. de will make a great income stock. While Wal-Mart de México. de is earning enough to cover the dividend, we are generally unimpressed with its future prospects. This company is not in the top tier of income providing stocks.

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. For example, we've picked out 1 warning sign for Wal-Mart de México. de that investors should know about before committing capital to this stock. 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.