RMR Group (NASDAQ:RMR) Has Announced A Dividend Of $0.40

The RMR Group Inc. (NASDAQ:RMR) has announced that it will pay a dividend of $0.40 per share on the 16th of November. This makes the dividend yield 6.8%, which will augment investor returns quite nicely.

View our latest analysis for RMR Group

RMR Group Doesn't Earn Enough To Cover Its Payments

If the payments aren't sustainable, a high yield for a few years won't matter that much. The last dividend was quite easily covered by RMR Group's earnings. This indicates that a lot of the earnings are being reinvested into the business, with the aim of fueling growth.

EPS is set to fall by 76.9% over the next 12 months. If the dividend continues along the path it has been on recently, the company could be paying out more than double what it is earning, which is definitely a bit high to be sustainable going forward.

RMR Group Doesn't Have A Long Payment History

Even though the company has been paying a consistent dividend for a while, we would like to see a few more years before we feel comfortable relying on it. The annual payment during the last 8 years was $1.00 in 2015, and the most recent fiscal year payment was $1.60. This implies that the company grew its distributions at a yearly rate of about 6.1% over that duration. The dividend has been growing as a reasonable rate, which we like. However, investors will probably want to see a longer track record before they consider RMR Group to be a consistent dividend paying stock.

Dividend Growth Is Doubtful

The company's investors will be pleased to have been receiving dividend income for some time. However, things aren't all that rosy. RMR Group has seen earnings per share falling at 8.7% per year over the last five years. A modest decline in earnings isn't great, and it makes it quite unlikely that the dividend will grow in the future unless that trend can be reversed.

Our Thoughts On RMR Group's Dividend

Overall, it's nice to see a consistent dividend payment, but we think that longer term, the current level of payment might be unsustainable. In the past, the payments have been unstable, but over the short term the dividend could be reliable, with the company generating enough cash to cover it. We would probably look elsewhere for an income investment.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Just as an example, we've come across 3 warning signs for RMR Group you should be aware of, and 1 of them doesn't sit too well with us. Is RMR Group not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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