Marcus & Millichap (NYSE:MMI) Has Announced A Dividend Of $0.25
Marcus & Millichap, Inc. (NYSE:MMI) has announced that it will pay a dividend of $0.25 per share on the 6th of October. This payment means the dividend yield will be 1.4%, which is below the average for the industry.
View our latest analysis for Marcus & Millichap
Marcus & Millichap Doesn't Earn Enough To Cover Its Payments
It would be nice for the yield to be higher, but we should also check if higher levels of dividend payment would be sustainable. Before making this announcement, Marcus & Millichap was earning enough to cover the dividend, but it wasn't generating any free cash flows. No cash flows could definitely make returning cash to shareholders difficult, or at least mean the balance sheet will come under pressure.
EPS is set to fall by 25.3% over the next 12 months if recent trends continue. If the dividend continues along the path it has been on recently, the payout ratio in 12 months could be 175%, which is definitely a bit high to be sustainable going forward.
Marcus & Millichap Is Still Building Its Track Record
The company hasn't been paying a dividend for very long at all, so we can't really make a judgement on how stable the dividend has been. This doesn't mean that the company can't pay a good dividend, but just that we want to wait until it can prove itself.
Dividend Growth Potential Is Shaky
Investors could be attracted to the stock based on the quality of its payment history. Unfortunately things aren't as good as they seem. Earnings per share has been sinking by 25% over the last five years. Such rapid declines definitely have the potential to constrain dividend payments if the trend continues into the future.
The Dividend Could Prove To Be Unreliable
In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Marcus & Millichap's payments, as there could be some issues with sustaining them into the future. While Marcus & Millichap is earning enough to cover the payments, the cash flows are lacking. We don't think Marcus & Millichap is a great stock to add to your portfolio if income is your focus.
Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Taking the debate a bit further, we've identified 1 warning sign for Marcus & Millichap that investors need to be conscious of moving forward. Is Marcus & Millichap not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.
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