Marshall Monteagle (JSE:MMP) Is Due To Pay A Dividend Of $0.3556

The board of Marshall Monteagle PLC (JSE:MMP) has announced that it will pay a dividend on the 1st of August, with investors receiving $0.3556 per share. Despite this raise, the dividend yield of 2.4% is only a modest boost to shareholder returns.

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Marshall Monteagle's Future Dividends May Potentially Be At Risk

While yield is important, another factor to consider about a company's dividend is whether the current payout levels are feasible. Based on the last payment, earnings were actually smaller than the dividend, and the company was actually spending more cash than it was making. Paying out such a large dividend compared to earnings while also not generating any free cash flow would definitely be difficult to keep up.

Over the next year, EPS could expand by 16.0% if the company continues along the path it has been on recently. If the dividend continues on its recent course, the payout ratio in 12 months could be 3,601%, which is a bit high and could start applying pressure to the balance sheet.

View our latest analysis for Marshall Monteagle

Dividend Volatility

Although the company has a long dividend history, it has been cut at least once in the last 10 years. Since 2015, the dividend has gone from $0.036 total annually to $0.04. This works out to be a compound annual growth rate (CAGR) of approximately 1.1% a year over that time. Modest growth in the dividend is good to see, but we think this is offset by historical cuts to the payments. It is hard to live on a dividend income if the company's earnings are not consistent.

Marshall Monteagle's Dividend Might Lack Growth

With a relatively unstable dividend, it's even more important to evaluate if earnings per share is growing, which could point to a growing dividend in the future. Marshall Monteagle has seen EPS rising for the last five years, at 16% per annum. While EPS is growing at a decent rate, but future growth could be limited by the amount of earnings being paid out to shareholders.

Marshall Monteagle's Dividend Doesn't Look Sustainable

In summary, while it's always good to see the dividend being raised, we don't think Marshall Monteagle's payments are rock solid. While we generally think the level of distributions are a bit high, we wouldn't rule it out as becoming a good dividend payer in the future as its earnings are growing healthily. This company is not in the top tier of income providing stocks.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For instance, we've picked out 3 warning signs for Marshall Monteagle that investors should take into consideration. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

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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.