Mountview Estates (LON:MTVW) Is Paying Out A Dividend Of £2.75
The board of Mountview Estates P.L.C. (LON:MTVW) has announced that it will pay a dividend of £2.75 per share on the 18th of August. Based on this payment, the dividend yield on the company's stock will be 5.4%, which is an attractive boost to shareholder returns.
We've found 21 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free.
While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. At the time of the last dividend payment, Mountview Estates was paying out a very large proportion of what it was earning and 1,081% of cash flows. This is certainly a risk factor, as reduced cash flows could force the company to pay a lower dividend.
Looking forward, EPS could fall by 3.7% if the company can't turn things around from the last few years. If the dividend continues along the path it has been on recently, the payout ratio in 12 months could be 96%, which is definitely a bit high to be sustainable going forward.
View our latest analysis for Mountview Estates
The company's dividend history has been marked by instability, with at least one cut in the last 10 years. Since 2015, the dividend has gone from £2.00 total annually to £5.25. This works out to be a compound annual growth rate (CAGR) of approximately 10% a year over that time. Mountview Estates has grown distributions at a rapid rate despite cutting the dividend at least once in the past. Companies that cut once often cut again, so we would be cautious about buying this stock solely for the dividend income.
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. Over the past five years, it looks as though Mountview Estates' EPS has declined at around 3.7% a year. 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.
Overall, it's nice to see a consistent dividend payment, but we think that longer term, the current level of payment might be unsustainable. The payments are bit high to be considered sustainable, and the track record isn't the best. Overall, we don't think this company has the makings of a good income stock.
Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. However, there are other things to consider for investors when analysing stock performance. For example, we've identified 2 warning signs for Mountview Estates (1 is concerning!) that you should be aware of before investing. Is Mountview Estates not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.
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Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.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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