Is Mueller Industries Inc (NYSE:MLI) A Smart Choice For Dividend Investors?
Dividends play an important role in compounding returns in the long run and end up forming a sizeable part of investment returns. Historically, Mueller Industries Inc (NYSE:MLI) has paid a dividend to shareholders. It currently yields 1.5%. Does Mueller Industries tick all the boxes of a great dividend stock? Below, I’ll take you through my analysis.
See our latest analysis for Mueller Industries
5 questions to ask before buying a dividend stock
If you are a dividend investor, you should always assess these five key metrics:
Is it paying an annual yield above 75% of dividend payers?
Does it consistently pay out dividends without missing a payment of significantly cutting payout?
Has it increased its dividend per share amount over the past?
Is its earnings sufficient to payout dividend at the current rate?
Will it have the ability to keep paying its dividends going forward?
How well does Mueller Industries fit our criteria?
The company currently pays out 27% of its earnings as a dividend, according to its trailing twelve-month data, which means that the dividend is covered by earnings. Furthermore, analysts have not forecasted a dividends per share for the future, which makes it hard to determine the yield shareholders should expect, and whether the current payout is sustainable, moving forward.
When considering the sustainability of dividends, it is also worth checking the cash flow of a company. Companies with strong cash flow can sustain a higher payout ratio, while companies with weaker cash flow generally cannot.
If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. In the case of MLI it has increased its DPS from $0.20 to $0.40 in the past 10 years. During this period it has not missed a payment, as one would expect for a company increasing its dividend. These are all positive signs of a great, reliable dividend stock.
In terms of its peers, Mueller Industries has a yield of 1.5%, which is on the low-side for Machinery stocks.
Next Steps:
With these dividend metrics in mind, I definitely rank Mueller Industries as a strong income stock, and is worth further research for anyone who considers dividends an important part of their portfolio strategy. 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. I’ve put together three pertinent aspects you should further examine:
Future Outlook: What are well-informed industry analysts predicting for MLI’s future growth? Take a look at our free research report of analyst consensus for MLI’s outlook.
Valuation: What is MLI 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 MLI 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.
