The board of Miller Industries, Inc. (NYSE:MLR) has announced that it will pay a dividend on the 13th of December, with investors receiving US$0.18 per share. The dividend yield will be 1.9% based on this payment which is still above the industry average.
Check out our latest analysis for Miller Industries
Miller Industries' Dividend Is Well Covered By Earnings
If the payments aren't sustainable, a high yield for a few years won't matter that much. However, based ont he last payment, Miller Industries was earning enough to cover the dividend pretty comfortably. The business is earning enough to make the dividend feasible, but the cash payout ratio of 75% shows that most of the cash is going back to the shareholders, which could constrain growth prospects going forward.
Looking forward, earnings per share could rise by 5.6% over the next year if the trend from the last few years continues. If the dividend continues on this path, the payout ratio could be 31% by next year, which we think can be pretty sustainable going forward.
Miller Industries Has A Solid Track Record
The company has a sustained record of paying dividends with very little fluctuation. The first annual payment during the last 10 years was US$0.10 in 2011, and the most recent fiscal year payment was US$0.72. This means that it has been growing its distributions at 22% per annum over that time. It is good to see that there has been strong dividend growth, and that there haven't been any cuts for a long time.
The Dividend Has Growth Potential
Investors could be attracted to the stock based on the quality of its payment history. It's encouraging to see Miller Industries has been growing its earnings per share at 5.6% a year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for Miller Industries' prospects of growing its dividend payments in the future.
Our Thoughts On Miller Industries' Dividend
In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Miller Industries' payments, as there could be some issues with sustaining them into the future. The low payout ratio is a redeeming feature, but generally we are not too happy with the payments Miller Industries has been making. We would probably look elsewhere for an income investment.
Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Are management backing themselves to deliver performance? Check their shareholdings in Miller Industries in our latest insider ownership analysis. If you are a dividend investor, you might also want to look at our curated list of high performing dividend stock.
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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.
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About NYSE:MLR
Solid track record with excellent balance sheet and pays a dividend.
