Minerals Technologies (NYSE:MTX) Is Paying Out A Larger Dividend Than Last Year
Minerals Technologies Inc.'s (NYSE:MTX) periodic dividend will be increasing on the 4th of December to $0.12, with investors receiving 9.1% more than last year's $0.11. This takes the annual payment to 0.8% of the current stock price, which unfortunately is below what the industry is paying.
Estimates Indicate Minerals Technologies' Dividend Coverage Likely To Improve
While yield is important, another factor to consider about a company's dividend is whether the current payout levels are feasible. While Minerals Technologies is not profitable, it is paying out less than 75% of its free cash flow, which means that there is plenty left over for reinvestment into the business. This gives us some comfort about the level of the dividend payments.
Analysts expect a massive rise in earnings per share in the next year. Assuming the dividend continues along recent trends, we think the payout ratio will be 24%, which makes us pretty comfortable with the sustainability of the dividend.
See our latest analysis for Minerals Technologies
Minerals Technologies Has A Solid Track Record
The company has an extended history of paying stable dividends. Since 2015, the annual payment back then was $0.20, compared to the most recent full-year payment of $0.44. This implies that the company grew its distributions at a yearly rate of about 8.2% over that duration. Dividends have grown at a reasonable rate over this period, and without any major cuts in the payment over time, we think this is an attractive combination as it provides a nice boost to shareholder returns.
The Dividend Has Limited Growth Potential
Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. However, things aren't all that rosy. Minerals Technologies' earnings per share has shrunk at 19% a year over the past five years. Dividend payments are likely to come under some pressure unless EPS can pull out of the nosedive it is in. On the bright side, earnings are predicted to gain some ground over the next year, but until this turns into a pattern we wouldn't be feeling too comfortable.
In Summary
In summary, while it's always good to see the dividend being raised, we don't think Minerals Technologies' payments are rock solid. The company has been bring in plenty of cash to cover the dividend, but we don't necessarily think that makes it a great dividend stock. We don't think Minerals Technologies is a great stock to add to your portfolio if income is your focus.
Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Given that earnings are not growing, the dividend does not look nearly so attractive. See if the 3 analysts are forecasting a turnaround in our free collection of analyst estimates here. Is Minerals Technologies not quite the opportunity you were looking for? Why not check out our selection of top 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.