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Mannatech, Incorporated (NASDAQ: MTEX) will increase its dividend on September 29 to $ 0.20. This makes the dividend yield of 5.0%, which is above the industry average.
Mannatech’s dividend is well covered by profits
A high dividend yield for a few years doesn’t mean much if it can’t be sustained. However, prior to this announcement, Mannatech’s dividend was comfortably covered by both cash flow and earnings. As a result, much of what she earned was reinvested in the business.
Looking ahead, earnings per share could increase by 58.7% over the next year if the trend of recent years continues. If the dividend continues on that path, the payout ratio could be 37% by next year, which we believe may be quite sustainable going forward.
NasdaqGS: MTEX ​​Historic dividend September 4, 2021
Mannatech dividend lacks consistency
Even in its relatively short history, the company has cut the dividend at least once. For this reason, we are a little cautious about the consistency of dividends over a full economic cycle. Since 2016, the first annual payment was US $ 0.50, compared to the most recent annual payment of US $ 0.80. This works out to a compound annual growth rate (CAGR) of about 9.9% per year over that time period. It’s good to see the dividend increasing at a decent rate, but the dividend has been reduced at least once in the past. Mannatech may have cleaned up his house since, but we remain cautious.
The dividend seems likely to increase
Growth in earnings per share could be a mitigating factor considering past dividend fluctuations. Mannatech has seen its EPS increase over the past five years, to 59% per year. A low payout ratio gives the company a lot of flexibility, and the growth in earnings also allows it to increase the dividend very easily.
Mannatech looks like a great dividend-paying stock
Overall, we think it could be an attractive income stock, and it’s only getting better by paying a higher dividend this year. Profits easily cover distributions and the company generates a lot of cash. Considering all of this, this looks like a good dividend opportunity.
Investors generally tend to favor companies with a consistent and stable dividend policy over those that operate irregularly. Meanwhile, despite the importance of dividend payments, they aren’t the only factors our readers should be aware of when valuing a business. For example, we have selected 4 warning signs for Mannatech that investors should consider. If you are a dividend investor, you can also view our curated list of high performing dividend stocks.
This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative documents. Simply Wall St has no position in the mentioned stocks.
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