Mannatech (NASDAQ:MTEX) Has Announced A Dividend Of $0.20

Mannatech, Incorporated (NASDAQ:MTEX) has announced that it will pay a dividend of $0.20 per share on the 29th of June. This means the annual payment is 6.3% of the current stock price, which is above the average for the industry.

View our latest analysis for Mannatech

Mannatech's Distributions May Be Difficult To Sustain

A big dividend yield for a few years doesn't mean much if it can't be sustained. Even though Mannatech is not generating a profit, it is still paying a dividend. Along with this, it is also not generating free cash flows, which raises concerns about the sustainability of the dividend.

Over the next year, EPS could expand by 28.2% if recent trends continue. This is the right direction to be moving, but it is probably not enough to achieve profitability. Unfortunately, for the dividend to continue at current levels the company definitely needs to get there sooner rather than later.

Mannatech's Dividend Has Lacked Consistency

It's comforting to see that Mannatech has been paying a dividend for a number of years now, however it has been cut at least once in that time. If the company cuts once, it definitely isn't argument against the possibility of it cutting in the future. The annual payment during the last 7 years was $0.50 in 2016, and the most recent fiscal year payment was $0.80. This works out to be a compound annual growth rate (CAGR) of approximately 6.9% a year over that time. It's good to see the dividend growing at a decent rate, but the dividend has been cut at least once in the past. Mannatech might have put its house in order since then, but we remain cautious.

The Company Could Face Some Challenges Growing The Dividend

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. We are encouraged to see that Mannatech has grown earnings per share at 28% per year over the past five years. The company hasn't been turning a profit, but it running in the right direction. If profitability can be achieved soon and growth continues apace, this stock could certainly turn into a solid dividend payer.

Mannatech's Dividend Doesn't Look Sustainable

Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. In general, the distributions are a little bit higher than we would like, but we can't ignore the fact the quickly growing earnings gives this stock great potential in the future. Overall, we don't think this company has the makings of a good income stock.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. However, there are other things to consider for investors when analysing stock performance. Case in point: We've spotted 2 warning signs for Mannatech (of which 1 is potentially serious!) you should know about. Is Mannatech not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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