Mueller Water Products (NYSE:MWA) Is Increasing Its Dividend To $0.07

Mueller Water Products, Inc. (NYSE:MWA) has announced that it will be increasing its periodic dividend on the 20th of November to $0.07, which will be 4.5% higher than last year's comparable payment amount of $0.067. Although the dividend is now higher, the yield is only 1.0%, which is below the industry average.

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Mueller Water Products' Payment Could Potentially Have Solid Earnings Coverage

The dividend yield is a little bit low, but sustainability of the payments is also an important part of evaluating an income stock. However, Mueller Water Products' earnings easily cover the dividend. This means that most of its earnings are being retained to grow the business.

Looking forward, earnings per share is forecast to rise by 77.1% over the next year. If the dividend continues along recent trends, we estimate the payout ratio will be 18%, which is in the range that makes us comfortable with the sustainability of the dividend.

Check out our latest analysis for Mueller Water Products

Mueller Water Products Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. Since 2015, the annual payment back then was $0.07, compared to the most recent full-year payment of $0.268. This means that it has been growing its distributions at 14% 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 Looks Likely To Grow

The company's investors will be pleased to have been receiving dividend income for some time. Mueller Water Products has seen EPS rising for the last five years, at 12% per annum. Mueller Water Products definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

Mueller Water Products Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that Mueller Water Products is a strong income stock thanks to its track record and growing earnings. Earnings are easily covering distributions, and the company is generating plenty of cash. All of these factors considered, we think this has solid potential as a dividend stock.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. As an example, we've identified 1 warning sign for Mueller Water Products that you should be aware of before investing. Is Mueller Water Products 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.