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Shares of MaxiTRANS Industries Limited (ASX:MXI) will begin trading ex-dividend in 4 days. To qualify for the dividend check of AU$0.015 per share, investors must have owned the shares prior to 26 September 2018, which is the last day the company’s management will finalize their list of shareholders to which they will send dividend payments. Should you diversify into MaxiTRANS Industries and boost your portfolio income stream? Well, keep on reading because today, I’m going to look at the latest data and analyze the stock and its dividend property in further detail.
View our latest analysis for MaxiTRANS Industries
5 questions I ask before picking a dividend stock
When researching a dividend stock, I always follow the following screening criteria:
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Is their annual yield among the top 25% of dividend payers?
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Has it paid dividend every year without dramatically reducing payout in the past?
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Has it increased its dividend per share amount over the past?
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Is is able to pay the current rate of dividends from its earnings?
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Will it be able to continue to payout at the current rate in the future?
How well does MaxiTRANS Industries fit our criteria?
The company currently pays out 62.2% of its earnings as a dividend, according to its trailing twelve-month data, meaning the dividend is sufficiently covered by earnings. Going forward, analysts expect MXI’s payout to remain around the same level at 62.0% of its earnings, which leads to a dividend yield of around 7.3%. In addition to this, EPS should increase to A$0.058.
When thinking about whether a dividend is sustainable, another factor to consider is the cash flow. A company with strong cash flow, relative to earnings, can sometimes sustain a high pay out ratio.
If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. Dividend payments from MaxiTRANS Industries have been volatile in the past 10 years, with some years experiencing significant drops of over 25%. This means that dividend hunters should probably steer clear of the stock, at least for now until the track record improves.
In terms of its peers, MaxiTRANS Industries produces a yield of 6.3%, which is high for Machinery stocks.
Next Steps:
Keeping in mind the dividend characteristics above, MaxiTRANS Industries is definitely worth considering for investors looking to build a dedicated income portfolio. 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. There are three key factors you should further examine: