Stock Analysis

Matthews International (NASDAQ:MATW) Has Announced A Dividend Of US$0.22

  •  Updated
NasdaqGS:MATW
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Matthews International Corporation (NASDAQ:MATW) has announced that it will pay a dividend of US$0.22 per share on the 21st of February. Based on this payment, the dividend yield on the company's stock will be 2.5%, which is an attractive boost to shareholder returns.

Check out our latest analysis for Matthews International

Matthews International Might Find It Hard To Continue The Dividend

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. Even though Matthews International isn't generating a profit, it is generating healthy free cash flows that easily cover the dividend. This gives us some comfort about the level of the dividend payments.

Recent, EPS has fallen by 47.1%, so this could continue over the next year. While this means that the company will be unprofitable, we generally believe cash flows are more important, and the current cash payout ratio is quite healthy, which gives us comfort.

historic-dividend
NasdaqGS:MATW Historic Dividend February 1st 2022

Matthews International Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. The dividend has gone from US$0.32 in 2012 to the most recent annual payment of US$0.88. This works out to be a compound annual growth rate (CAGR) of approximately 11% a year over that time. So, dividends have been growing pretty quickly, and even more impressively, they haven't experienced any notable falls during this period.

Dividend Growth Potential Is Shaky

Investors could be attracted to the stock based on the quality of its payment history. Unfortunately things aren't as good as they seem. Matthews International's earnings per share has shrunk at 47% a year over the past five years. Such rapid declines definitely have the potential to constrain dividend payments if the trend continues into the future.

Our Thoughts On Matthews International's Dividend

Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. The company has been bring in plenty of cash to cover the dividend, but we don't necessarily think that makes it a great dividend stock. We would be a touch cautious of relying on this stock primarily for the dividend income.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For example, we've identified 2 warning signs for Matthews International (1 is a bit concerning!) that you should be aware of before investing. If you are a dividend investor, you might also want to look at our curated list of high performing dividend stock.

What are the risks and opportunities for Matthews International?

Matthews International Corporation provides brand solutions, memorialization products, and industrial technologies worldwide.

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Rewards

  • Earnings are forecast to grow 105.42% per year

Risks

  • Interest payments are not well covered by earnings

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