A sizeable part of portfolio returns can be produced by dividend stocks due to their contribution to compounding returns in the long run. In the past 8 years Miller Industries Inc (NYSE:MLR) has returned an average of 3.00% per year to investors in the form of dividend payouts. Does Miller Industries tick all the boxes of a great dividend stock? Below, I’ll take you through my analysis. Check out our latest analysis for Miller Industries
5 questions to ask before buying a dividend stock
When researching a dividend stock, I always follow the following screening criteria:
- Is their annual yield among the top 25% of dividend payers?
- Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?
- Has dividend per share risen in the past couple of years?
- Is its earnings sufficient to payout dividend at the current rate?
- Will it be able to continue to payout at the current rate in the future?
How does Miller Industries fare?
Miller Industries has a trailing twelve-month payout ratio of 31.69%, which means that the dividend is covered by earnings. Furthermore, analysts have not forecasted a dividends per share for the future, which makes it hard to determine the yield shareholders should expect, and whether the current payout is sustainable, moving forward.
Reliablity is an important factor for dividend stocks, particularly for income investors who want a strong track record of payment and a positive outlook for future payout. Unfortunately, it is really too early to view Miller Industries as a dividend investment. It has only been consistently paying dividends for 8 years, however, standard practice for reliable payers is to look for a 10-year minimum track record.Compared to its peers, Miller Industries generates a yield of 2.75%, which is high for Machinery stocks but still below the market’s top dividend payers.
Now you know to keep in mind the reason why investors should be careful investing in Miller Industries for the dividend. On the other hand, if you are not strictly just a dividend investor, the stock could still be offering some interesting investment opportunities. Given that this is purely a dividend analysis, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. There are three important factors you should look at:
- Future Outlook: What are well-informed industry analysts predicting for MLR’s future growth? Take a look at our free research report of analyst consensus for MLR’s outlook.
- Historical Performance: What has MLR’s returns been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
- Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.