Grupo México. de (BMV:GMEXICOB) Is Paying Out A Larger Dividend Than Last Year

Grupo México, S.A.B. de C.V. (BMV:GMEXICOB) will increase its dividend from last year's comparable payment on the 26th of November to $1.30. Even though the dividend went up, the yield is still quite low at only 3.5%.

Check out our latest analysis for Grupo México. de

Estimates Indicate Grupo México. de's Could Struggle to Maintain Dividend Payments In The Future

If it is predictable over a long period, even low dividend yields can be attractive. Prior to this announcement, Grupo México. 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.

Over the next year, EPS is forecast to expand by 23.7%. Assuming the dividend continues along recent trends, we think the payout ratio could get very high, which probably can't continue without starting to put some pressure on the balance sheet.

Dividend Volatility

The company has a long dividend track record, but it doesn't look great with cuts in the past. The dividend has gone from an annual total of $0.0682 in 2014 to the most recent total annual payment of $0.175. This works out to be a compound annual growth rate (CAGR) of approximately 9.9% 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

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. Grupo México. de has seen EPS rising for the last five years, at 19% per annum. Shareholders are getting plenty of the earnings returned to them, which combined with strong growth makes this quite appealing.

Grupo México. de Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that Grupo México. de is a strong income stock thanks to its track record and growing earnings. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. All of these factors considered, we think this has solid potential as a dividend stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For example, we've picked out 1 warning sign for Grupo México. de that investors should know about before committing capital to this stock. Is Grupo México. de 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.