NYSE:MDU) is about to trade ex-dividend in the next 4 days. You can purchase shares before the 9th of September in order to receive the dividend, which the company will pay on the 1st of October.” data-reactid=”28″>Regular readers will know that we love our dividends at Simply Wall St, which is why it’s exciting to see MDU Resources Group, Inc. (NYSE:MDU) is about to trade ex-dividend in the next 4 days. You can purchase shares before the 9th of September in order to receive the dividend, which the company will pay on the 1st of October.
MDU Resources Group’s next dividend payment will be US$0.21 per share. Last year, in total, the company distributed US$0.83 to shareholders. Based on the last year’s worth of payments, MDU Resources Group has a trailing yield of 3.4% on the current stock price of $24.19. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. So we need to check whether the dividend payments are covered, and if earnings are growing.
Check out our latest analysis for MDU Resources Group ” data-reactid=”30″> Check out our latest analysis for MDU Resources Group
Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. Fortunately MDU Resources Group’s payout ratio is modest, at just 46% of profit. A useful secondary check can be to evaluate whether MDU Resources Group generated enough free cash flow to afford its dividend. Over the last year it paid out 58% of its free cash flow as dividends, within the usual range for most companies.
It’s encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don’t drop precipitously.
here to see the company’s payout ratio, plus analyst estimates of its future dividends.” data-reactid=”37″>Click here to see the company’s payout ratio, plus analyst estimates of its future dividends.
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. For this reason, we’re glad to see MDU Resources Group’s earnings per share have risen 13% per annum over the last five years. MDU Resources Group is paying out a bit over half its earnings, which suggests the company is striking a balance between reinvesting in growth, and paying dividends. This is a reasonable combination that could hint at some further dividend increases in the future.
The main way most investors will assess a company’s dividend prospects is by checking the historical rate of dividend growth. In the past 10 years, MDU Resources Group has increased its dividend at approximately 2.8% a year on average. It’s good to see both earnings and the dividend have improved – although the former has been rising much quicker than the latter, possibly due to the company reinvesting more of its profits in growth.
To Sum It Up
Is MDU Resources Group worth buying for its dividend? Earnings per share have grown at a nice rate in recent times and over the last year, MDU Resources Group paid out less than half its earnings and a bit over half its free cash flow. It’s a promising combination that should mark this company worthy of closer attention.
1 warning sign for MDU Resources Group that you should be aware of before investing in their shares.” data-reactid=”55″>In light of that, while MDU Resources Group has an appealing dividend, it’s worth knowing the risks involved with this stock. To help with this, we’ve discovered 1 warning sign for MDU Resources Group that you should be aware of before investing in their shares.
checking our list of top dividend stocks with a greater than 2% yield and an upcoming dividend.” data-reactid=”60″>If you’re in the market for dividend stocks, we recommend checking our list of top dividend stocks with a greater than 2% yield and an upcoming dividend.
Get in touch with us directly. Alternatively, email [email protected].” data-reactid=”61″>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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