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Marine Products Corporation (NYSE:MPX) is about to trade ex-dividend in the next 4 days. You will need to purchase shares before the 9th of February to receive the dividend, which will be paid on the 10th of March.
Marine Products's upcoming dividend is US$0.10 a share, following on from the last 12 months, when the company distributed a total of US$0.38 per share to shareholders. Based on the last year's worth of payments, Marine Products stock has a trailing yield of around 2.1% on the current share price of $17.81. If you buy this business for its dividend, you should have an idea of whether Marine Products's dividend is reliable and sustainable. As a result, readers should always check whether Marine Products has been able to grow its dividends, or if the dividend might be cut.
Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. Marine Products paid out 59% of its earnings to investors last year, a normal payout level for most businesses.
Have Earnings And Dividends Been Growing?
Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. This is why it's a relief to see Marine Products earnings per share are up 8.2% per annum over the last five years. Decent historical earnings per share growth suggests Marine Products has been effectively growing value for shareholders. However, it's now paying out more than half its earnings as dividends. If management lifts the payout ratio further, we'd take this as a tacit signal that the company's growth prospects are slowing.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Since the start of our data, nine years ago, Marine Products has lifted its dividend by approximately 19% a year on average. It's encouraging to see the company lifting dividends while earnings are growing, suggesting at least some corporate interest in rewarding shareholders.
The Bottom Line
Is Marine Products worth buying for its dividend? Marine Products has been generating some growth in earnings per share while paying out more than half of its earnings to shareholders in the form of dividends. Marine Products ticks a lot of boxes for us from a dividend perspective, and we think these characteristics should mark the company as deserving of further attention.
With that in mind, a critical part of thorough stock research is being aware of any risks that stock currently faces. For example, we've found 1 warning sign for Marine Products that we recommend you consider before investing in the business.
A common investment mistake is buying the first interesting stock you see. Here you can find a list of promising dividend stocks with a greater than 2% yield and an upcoming dividend.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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