MyState's (ASX:MYS) Dividend Will Be Reduced To A$0.115
MyState Limited (ASX:MYS) has announced that on 21st of March, it will be paying a dividend ofA$0.115, which a reduction from last year's comparable dividend. This means that the annual payment will be 5.7% of the current stock price, which is in line with the average for the industry.
View our latest analysis for MyState
MyState's Dividend Forecasted To Be Well Covered By Earnings
Unless the payments are sustainable, the dividend yield doesn't mean too much.
MyState has a long history of paying out dividends, with its current track record at a minimum of 10 years. Past distributions do not necessarily guarantee future ones, but MyState's payout ratio of 69% is a good sign as this means that earnings decently cover dividends.
Over the next 3 years, EPS is forecast to expand by 47.6%. Analysts estimate the future payout ratio will be 67% over the same time period, which is in the range that makes us comfortable with the sustainability of the dividend.
Dividend Volatility
The company has a long dividend track record, but it doesn't look great with cuts in the past. Since 2013, the annual payment back then was A$0.28, compared to the most recent full-year payment of A$0.23. This works out to be a decline of approximately 1.9% per year over that time. Generally, we don't like to see a dividend that has been declining over time as this can degrade shareholders' returns and indicate that the company may be running into problems.
Dividend Growth May Be Hard To Achieve
Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. Unfortunately, MyState's earnings per share has been essentially flat over the past five years, which means the dividend may not be increased each year.
In Summary
Overall, the dividend looks like it may have been a bit high, which explains why it has now been cut. The low payout ratio is a redeeming feature, but generally we are not too happy with the payments MyState has been making. Overall, we don't think this company has the makings of a good income stock.
It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. However, there are other things to consider for investors when analysing stock performance. Case in point: We've spotted 3 warning signs for MyState (of which 1 is significant!) you should know about. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.
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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.
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