Dividend Analysis: A Deep Dive into Mercer International Inc's Dividend Performance
Assessing the Sustainability and Growth of Mercer International Inc's Dividend
Mercer International Inc(NASDAQ:MERC) recently announced a dividend of $0.08 per share, payable on 2023-10-04, with the ex-dividend date set for 2023-09-26. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's deep dive into Mercer International Inc's dividend performance and assess its sustainability.
What Does Mercer International Inc Do?
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Mercer International Inc is a forest products company with two reportable operating segments in pulp and solid wood. Pulp segment consists of the manufacture, sale and distribution of pulp, electricity and chemicals. Solid wood segment consists of the manufacture, sale and distribution of lumber, manufactured products wood pallets, electricity, biofuels and wood residuals from sawmills and other facilities located in Germany and the United States. The company has its geographical presence in USA, Germany, China and Other countries. Majority of the revenue is generated from the Pulp segment.
A Glimpse at Mercer International Inc's Dividend History
Mercer International Inc has maintained a consistent dividend payment record since 2015. Dividends are currently distributed on a quarterly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Mercer International Inc's Dividend Yield and Growth
As of today, Mercer International Inc currently has a 12-month trailing dividend yield of 3.56% and a 12-month forward dividend yield of 3.56%. This suggests an expectation of same dividend payments over the next 12 months.
Over the past three years, Mercer International Inc's annual dividend growth rate was -17.70%. Extended to a five-year horizon, this rate increased to -12.50% per year. Based on Mercer International Inc's dividend yield and five-year growth rate, the 5-year yield on cost of Mercer International Inc stock as of today is approximately 1.83%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-06-30, Mercer International Inc's dividend payout ratio is 0.00.
Mercer International Inc's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Mercer International Inc's profitability 7 out of 10 as of 2023-06-30, suggesting good profitability prospects. The company has reported net profit in 7 years out of past 10 years.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Mercer International Inc's growth rank of 7 out of 10 suggests that the company's growth trajectory is good relative to its competitors.
Revenue is the lifeblood of any company, and Mercer International Inc's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Mercer International Inc's revenue has increased by approximately 11.40% per year on average, a rate that outperforms than approximately 63.67% of global competitors.
Conclusion
Considering Mercer International Inc's consistent dividend payments, dividend growth rate, payout ratio, profitability, and growth metrics, the company appears to have a sustainable dividend model. However, the negative dividend growth rate over the past three and five years is a point of concern. Investors should keep an eye on these factors while making informed financial decisions. GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
This article first appeared on GuruFocus.
