MillerKnoll (NASDAQ:MLKN) Has Affirmed Its Dividend Of $0.1875

The board of MillerKnoll, Inc. (NASDAQ:MLKN) has announced that it will pay a dividend on the 15th of January, with investors receiving $0.1875 per share. This means the annual payment is 4.4% of the current stock price, which is above the average for the industry.

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MillerKnoll's Projections Indicate Future Payments May Be Unsustainable

Estimates Indicate MillerKnoll's Could Struggle to Maintain Dividend Payments In The Future

MillerKnoll's Future Dividends May Potentially Be At Risk

A big dividend yield for a few years doesn't mean much if it can't be sustained. Even though MillerKnoll isn't generating a profit, it is generating healthy free cash flows that easily cover the dividend. In general, cash flows are more important than the more traditional measures of profit so we feel pretty comfortable with the dividend at this level.

Earnings per share is forecast to rise by 103.3% over the next year. If the dividend continues on its recent course, the company could be paying out several times what it earns in the next 12 months, which could start applying pressure to the balance sheet.

Check out our latest analysis for MillerKnoll

Dividend Volatility

The company has a long dividend track record, but it doesn't look great with cuts in the past. The dividend has gone from an annual total of $0.56 in 2015 to the most recent total annual payment of $0.75. This works out to be a compound annual growth rate (CAGR) of approximately 3.0% a year over that time. The dividend has seen some fluctuations in the past, so even though the dividend was raised this year, we should remember that it has been cut in the past.

Dividend Growth May Be Hard To Achieve

Given that the dividend has been cut in the past, we need to check if earnings are growing and if that might lead to stronger dividends in the future. Unfortunately, MillerKnoll's earnings per share has been essentially flat over the past five years, which means the dividend may not be increased each year.

MillerKnoll's Dividend Doesn't Look Sustainable

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about MillerKnoll's payments, as there could be some issues with sustaining them into the future. The company is generating plenty of cash, which could maintain the dividend for a while, but the track record hasn't been great. We would be a touch cautious of relying on this stock primarily for the dividend income.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. To that end, MillerKnoll has 2 warning signs (and 1 which is potentially serious) we think you should know about. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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