Income Investors Should Know The Marsh & McLennan Companies Inc (NYSE:MMC) Ex-Dividend Date
Attention dividend hunters! Marsh & McLennan Companies Inc (NYSE:MMC) will be distributing its dividend of US$0.41 per share on the 15 November 2018, and will start trading ex-dividend in 4 days time on the 10 October 2018. Is this future income stream a compelling catalyst for dividend investors to think about the stock as an investment today? Let’s take a look at Marsh & McLennan Companies’s most recent financial data to examine its dividend characteristics in more detail.
Check out our latest analysis for Marsh & McLennan Companies
5 questions I ask before picking a dividend stock
Whenever I am looking at a potential dividend stock investment, I always check these five metrics:
Is it the top 25% annual dividend yield payer?
Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?
Has dividend per share amount increased over the past?
Is its earnings sufficient to payout dividend at the current rate?
Will it be able to continue to payout at the current rate in the future?
Does Marsh & McLennan Companies pass our checks?
The company currently pays out 48% of its earnings as a dividend, according to its trailing twelve-month data, meaning the dividend is sufficiently covered by earnings. However, going forward, analysts expect MMC’s payout to fall to 37% of its earnings, which leads to a dividend yield of 2.1%. However, EPS should increase to $4.47, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment.
When thinking about whether a dividend is sustainable, another factor to consider is the cash flow. Companies with strong cash flow can sustain a higher payout ratio, while companies with weaker cash flow generally cannot.
If dividend is a key criteria in your investment consideration, then you need to make sure the dividend stock you’re eyeing out is reliable in its payments. MMC has increased its DPS from $0.80 to $1.66 in the past 10 years. It has also been paying out dividend consistently during this time, as you’d expect for a company increasing its dividend levels. This is an impressive feat, which makes MMC a true dividend rockstar.
In terms of its peers, Marsh & McLennan Companies generates a yield of 2.0%, which is on the low-side for Insurance stocks.
Next Steps:
Considering the dividend attributes we analyzed above, Marsh & McLennan Companies is definitely worth keeping an eye on for someone looking to build a dedicated income portfolio. Given that this is purely a dividend analysis, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. There are three pertinent factors you should further examine:
Future Outlook: What are well-informed industry analysts predicting for MMC’s future growth? Take a look at our free research report of analyst consensus for MMC’s outlook.
Valuation: What is MMC worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether MMC is currently mispriced by the market.
Other Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
