The board of Mueller Water Products, Inc. (NYSE:MWA) has announced that it will pay a dividend on the 20th of August, with investors receiving $0.064 per share. Including this payment, the dividend yield on the stock will be 1.2%, which is a modest boost for shareholders’ returns.
View our latest analysis for Mueller Water Products
Mueller Water Products’ Payment Has Solid Earnings Coverage
While yield is important, another factor to consider about a company’s dividend is whether the current payout levels are feasible. However, Mueller Water Products’ earnings easily cover the dividend. This means that most of what the business earns is being used to help it grow.
Looking forward, earnings per share is forecast to rise by 100.3% over the next year. If the dividend continues on this path, the payout ratio could be 22% by next year, which we think can be pretty sustainable going forward.
Mueller Water Products Has A Solid Track Record
Even over a long history of paying dividends, the company’s distributions have been remarkably stable. The dividend has gone from an annual total of $0.07 in 2014 to the most recent total annual payment of $0.256. This means that it has been growing its distributions at 14% per annum over that time. We can see that payments have shown some very nice upward momentum without faltering, which provides some reassurance that future payments will also be reliable.
The Dividend Looks Likely To Grow
Some investors will be chomping at the bit to buy some of the company’s stock based on its dividend history. It’s encouraging to see that Mueller Water Products has been growing its earnings per share at 27% a year over the past five years. A low payout ratio gives the company a lot of flexibility, and growing earnings also make it very easy for it to grow the dividend.
Mueller Water Products Looks Like A Great Dividend Stock
In summary, it is good to see that the dividend is staying consistent, and we don’t think there is any reason to suspect this might change over the medium term. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. All of these factors considered, we think this has solid potential as a dividend stock.
Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Earnings growth generally bodes well for the future value of company dividend payments. See if the 6 Mueller Water Products analysts we track are forecasting continued growth with our free report on analyst estimates for the company. 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.
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