The board of Miller Industries, Inc. (NYSE:MLR) has announced that it will pay a dividend on the 11th of December, with investors receiving $0.18 per share. This means that the annual payment will be 1.8% of the current stock price, which is in line with the average for the industry.
See our latest analysis for Miller Industries
Miller Industries' Payment Has Solid Earnings Coverage
Unless the payments are sustainable, the dividend yield doesn't mean too much. Based on the last payment, Miller Industries was paying only paying out a fraction of earnings, but the payment was a massive 265% of cash flows. A cash payout ratio this high could put the dividend under pressure and force the company to reduce it in the future if it were to run into tough times.
Over the next year, EPS could expand by 9.4% if recent trends continue. If the dividend continues on this path, the payout ratio could be 15% by next year, which we think can be pretty sustainable going forward.
Miller Industries Has A Solid Track Record
Even over a long history of paying dividends, the company's distributions have been remarkably stable. Since 2013, the dividend has gone from $0.56 total annually to $0.72. This implies that the company grew its distributions at a yearly rate of about 2.5% over that duration. While the consistency in the dividend payments is impressive, we think the relatively slow rate of growth is less attractive.
Miller Industries Could Grow Its Dividend
The company's investors will be pleased to have been receiving dividend income for some time. Miller Industries has impressed us by growing EPS at 9.4% per year over the past five years. Growth in EPS bodes well for the dividend, as does the low payout ratio that the company is currently reporting.
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. While Miller Industries is earning enough to cover the payments, the cash flows are lacking. This company is not in the top tier of income providing stocks.
Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. To that end, Miller Industries has 2 warning signs (and 1 which is potentially serious) we think you should know about. Is Miller Industries 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.
About NYSE:MLR
Solid track record with excellent balance sheet and pays a dividend.
