Médica Sur. de's (BMV:MEDICAB) Dividend Will Be MX$1.50

Médica Sur, S.A.B. de C.V.'s (BMV:MEDICAB) investors are due to receive a payment of MX$1.50 per share on 20th of May. This makes the dividend yield 4.2%, which will augment investor returns quite nicely.

We've discovered 1 warning sign about Médica Sur. de. View them for free.

Médica Sur. de's 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. Prior to this announcement, Médica Sur. de's dividend was comfortably covered by both cash flow and earnings. This means that a large portion of its earnings are being retained to grow the business.

If the trend of the last few years continues, EPS will grow by 26.9% over the next 12 months. If the dividend continues along recent trends, we estimate the payout ratio will be 37%, which is in the range that makes us comfortable with the sustainability of the dividend.

View our latest analysis for Médica Sur. de

Dividend Volatility

The company's dividend history has been marked by instability, with at least one cut in the last 10 years. Since 2015, the dividend has gone from MX$0.85 total annually to MX$1.50. This works out to be a compound annual growth rate (CAGR) of approximately 5.8% a year over that time. A reasonable rate of dividend growth is good to see, but we're wary that the dividend history is not as solid as we'd like, having been cut at least once.

The Dividend Looks Likely To Grow

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. It's encouraging to see that Médica Sur. de has been growing its earnings per share at 27% a year over the past five years. Médica Sur. de is clearly able to grow rapidly while still returning cash to shareholders, positioning it to become a strong dividend payer in the future.

Médica Sur. de Looks Like A Great Dividend Stock

Overall, we like to see the dividend staying consistent, and we think Médica Sur. de might even raise payments in the future. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All in all, this checks a lot of the boxes we look for when choosing an income stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. However, there are other things to consider for investors when analysing stock performance. As an example, we've identified 1 warning sign for Médica Sur. de that you should be aware of before investing. 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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