Ingles Markets, Incorporated (NASDAQ:IMKT.A) has announced that it will pay a dividend of US$0.17 per share on the 14th of April. This means the annual payment will be 0.7% of the current stock price, which is lower than the industry average.
Ingles Markets' Dividend Is Well Covered By Earnings
If it is predictable over a long period, even low dividend yields can be attractive. However, Ingles Markets' earnings easily cover the dividend. As a result, a large proportion of what it earned was being reinvested back into the business.
Over the next year, EPS could expand by 38.4% if recent trends continue. If the dividend continues on this path, the payout ratio could be 3.5% by next year, which we think can be pretty sustainable going forward.
Ingles Markets Has A Solid Track Record
The company has a sustained record of paying dividends with very little fluctuation. There hasn't been much of a change in the dividend over the last 10. Although we can't deny that the dividend has been remarkably stable in the past, the growth has been pretty muted.
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 Ingles Markets has been growing its earnings per share at 38% a year over the past five years. Rapid earnings growth and a low payout ratio suggest this company has been effectively reinvesting in its business. Should that continue, this company could have a bright future.
Ingles Markets 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. As an example, we've identified 2 warning signs for Ingles Markets that you should be aware of before investing. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.
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