Miller Industries (NYSE:MLR) Will Pay A Dividend Of $0.18
The board of Miller Industries, Inc. (NYSE:MLR) has announced that it will pay a dividend of $0.18 per share on the 11th of September. This means that the annual payment will be 1.8% of the current stock price, which is in line with the average for the industry.
See our latest analysis for Miller Industries
Miller Industries' Earnings Easily Cover The Distributions
While it is always good to see a solid dividend yield, we should also consider whether the payment is feasible. Before making this announcement, Miller Industries was paying a whopping 140% as a dividend, but this only made up 21% of its overall earnings. A cash payout ratio this high could put the dividend under pressure and force the company to reduce it in the future if it were to run into tough times.
If the trend of the last few years continues, EPS will grow by 6.5% over the next 12 months. Assuming the dividend continues along recent trends, we think the payout ratio could be 21% by next year, which is in a pretty sustainable range.
Miller Industries Has A Solid Track Record
The company has an extended history of paying stable dividends. Since 2013, the annual payment back then was $0.52, compared to the most recent full-year payment of $0.72. This implies that the company grew its distributions at a yearly rate of about 3.3% over that duration. While the consistency in the dividend payments is impressive, we think the relatively slow rate of growth is less attractive.
We Could See Miller Industries' Dividend Growing
Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. We are encouraged to see that Miller Industries has grown earnings per share at 6.5% per year over the past five years. A low payout ratio and decent growth suggests that the company is reinvesting well, and it also has plenty of room to increase the dividend over time.
Our Thoughts On Miller Industries' Dividend
Overall, it's nice to see a consistent dividend payment, but we think that longer term, the current level of payment might be unsustainable. With cash flows lacking, it is difficult to see how the company can sustain a dividend payment. We don't think Miller Industries 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. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. To that end, Miller Industries has 2 warning signs (and 1 which is potentially serious) we think you should know about. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.
