GMéxico Transportes. de (BMV:GMXT) Has Affirmed Its Dividend Of MX$0.50

The board of GMéxico Transportes, S.A.B. de C.V. (BMV:GMXT) has announced that it will pay a dividend of MX$0.50 per share on the 23rd of February. This means the annual payment is 5.2% of the current stock price, which is above the average for the industry.

See our latest analysis for GMéxico Transportes. de

GMéxico Transportes. de's Payment Has Solid Earnings Coverage

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. Prior to this announcement, the company was paying out 101% of what it was earning and 80% of cash flows. This indicates that the company could be more focused on returning cash to shareholders than reinvesting to grow the business.

Over the next year, EPS is forecast to expand by 40.1%. If the dividend continues along recent trends, we estimate the payout ratio could reach 92%, which is on the higher side, but certainly still feasible.

GMéxico Transportes. de Is Still Building Its Track Record

Even though the company has been paying a consistent dividend for a while, we would like to see a few more years before we feel comfortable relying on it. Since 2018, the annual payment back then was MX$0.15, compared to the most recent full-year payment of MX$2.00. This works out to be a compound annual growth rate (CAGR) of approximately 54% a year over that time. We're not overly excited about the relatively short history of dividend payments, however the dividend is growing at a nice rate and we might take a closer look.

The Dividend's Growth Prospects Are Limited

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Earnings per share has been crawling upwards at 2.8% per year. The earnings growth is anaemic, and the company is paying out 101% of its profit. Limited recent earnings growth and a high payout ratio makes it hard for us to envision strong future dividend growth, unless the company should have substantial pricing power or some form of competitive advantage.

GMéxico Transportes. de's Dividend Doesn't Look Sustainable

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about GMéxico Transportes. de's payments, as there could be some issues with sustaining them into the future. The payments are bit high to be considered sustainable, and the track record isn't the best. We don't think GMéxico Transportes. de is a great stock to add to your portfolio if income is your focus.

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 1 warning sign for GMéxico Transportes. de that investors should know about before committing capital to this stock. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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