MFF Capital Investments Limited (ASX:MFF) will increase its dividend from last year's comparable payment on the 14th of May to A$0.08. This makes the dividend yield about the same as the industry average at 3.4%.

See our latest analysis for MFF Capital Investments

MFF Capital Investments' Payment Could Potentially Have Solid Earnings Coverage

Solid dividend yields are great, but they only really help us if the payment is sustainable. However, MFF Capital Investments' earnings easily cover the dividend. This means that most of what the business earns is being used to help it grow.

If the trend of the last few years continues, EPS will grow by 9.4% over the next 12 months. Assuming the dividend continues along recent trends, we think the payout ratio could be 14% by next year, which is in a pretty sustainable range.

MFF Capital Investments Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. Since 2015, the dividend has gone from A$0.02 total annually to A$0.16. This implies that the company grew its distributions at a yearly rate of about 23% over that duration. It is good to see that there has been strong dividend growth, and that there haven't been any cuts for a long time.

We Could See MFF Capital Investments' Dividend Growing

Investors could be attracted to the stock based on the quality of its payment history. We are encouraged to see that MFF Capital Investments has grown earnings per share at 9.4% per year over the past five years. MFF Capital Investments definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

We Really Like MFF Capital Investments' Dividend

Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. Earnings are easily covering distributions, and the company is generating plenty of cash. All in all, this checks a lot of the boxes we look for when choosing an income stock.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. However, there are other things to consider for investors when analysing stock performance. You can also discover whether shareholders are aligned with insider interests by checking our visualisation of insider shareholdings and trades in MFF Capital Investments stock. Is MFF Capital Investments 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.