Marcus & Millichap (NYSE:MMI) Has Announced A Dividend Of $0.25

Marcus & Millichap, Inc.'s (NYSE:MMI) investors are due to receive a payment of $0.25 per share on 5th of April. This payment means that the dividend yield will be 2.6%, which is around the industry average.

See our latest analysis for Marcus & Millichap

Marcus & Millichap Is Paying Out More Than It Is Earning

We like a dividend to be consistent over the long term, so checking whether it is sustainable is important. Even though Marcus & Millichap 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 is forecast to expand by 164.6%. Assuming the dividend continues along recent trends, we think the payout ratio could reach 188%, which probably can't continue without putting some pressure on the balance sheet.

Marcus & Millichap Is Still Building Its Track Record

Looking back, the dividend has been stable, but the company hasn't been paying a dividend for very long so we can't be confident that the dividend will remain stable through all economic environments. Since 2022, the dividend has gone from $0.50 total annually to $1.00. This means that it has been growing its distributions at 41% per annum over that time. The dividend has been growing rapidly, however with such a short payment history we can't know for sure if payment can continue to grow over the long term, so caution may be warranted.

The Dividend's Growth Prospects Are Limited

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. However, Marcus & Millichap's EPS was effectively flat over the past five years, which could stop the company from paying more every year. With no profits, we don't think Marcus & Millichap has much potential to grow the dividend in the future.

The Dividend Could Prove To Be Unreliable

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Marcus & Millichap's payments, as there could be some issues with sustaining them into the future. The track record isn't great, and the payments are a bit high to be considered sustainable. We would be a touch cautious of relying on this stock primarily for the dividend income.

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. For example, we've picked out 1 warning sign for Marcus & Millichap that investors should know about before committing capital to this stock. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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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.