Mueller Water Products (NYSE: MWA) announced a dividend of $0.058
Mueller Water Products, Inc. (NYSE: MWA) will pay a dividend of $0.058 on August 22. Based on this payout, the dividend yield will be 1.8%, which is fairly typical for the industry.
Mueller Water Products payment has strong revenue coverage
We’re not too impressed with dividend yields unless they can be sustained over time. Based on the latest dividend, Mueller Water Products earns enough to cover the payout, but then that’s 98% of cash flow. While the company may be more focused on returning cash to shareholders than growing the business at this time, we believe that such a high cash payout ratio could expose the dividend to a reduction if the company was having difficulties.
Next year is expected to see EPS increase by 66.7%. If the dividend continues on this path, the payout ratio could be 33% by next year, which we believe can be quite sustainable in the future.
Mueller Water Products has a strong track record
The company has a long history of paying stable dividends. The annual payment over the past 10 years was $0.07 in 2012, and the most recent year’s payment was $0.232. This means that it has increased its distributions by 13% per year during this period. It is good to see that there has been strong growth in dividends and that there has not been a reduction for a long time.
The dividend should increase
Investors might be attracted to the stock based on the quality of its payment history. Mueller Water Products has seen BPA increase over the past five years, at 14% per year. The lack of cash flow makes us somewhat cautious, however, especially regarding the future of the dividend.
Our thoughts on the Mueller Water Products dividend
Overall, we don’t think this company is generating a great dividend, even though the dividend hasn’t been cut this year. Although Mueller Water Products earns enough to cover payments, cash flow is lacking. We don’t think Mueller Water Products is a great stock to add to your portfolio if income is your priority.
Investors generally tend to favor companies with a consistent and stable dividend policy as opposed to those with an irregular one. At the same time, there are other factors that our readers should be aware of before investing capital in a stock. For example, we chose 3 warning signs for Mueller water products that investors should be aware of before committing capital to this security. Looking for more high yield dividend ideas? Try our collection of strong dividend payers.
Feedback on this article? Concerned about content?Get in touch with us directly. You can also email the editorial team (at) Simplywallst.com.
This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.