América Móvil, S.A.B. de C.V. (BMV:AMXB) is set to pay a dividend of MX$0.24 on November 11th, bringing the dividend yield to 3.0%, which is in line with the industry average. Prior to this announcement, América Móvil’s dividend was well covered by both cash flow and earnings, indicating that a significant portion of earnings are being reinvested to grow the business.
Looking ahead, the next year is expected to see EPS grow by 83.7%, potentially resulting in a payout ratio of 29% by next year. Despite a history of dividend cuts, América Móvil has shown a compound annual growth rate of approximately 7.2% over time.
With relatively slow earnings growth of 3.7% per annum over the last five years, it may be challenging for América Móvil to achieve significant dividend growth in the future. While the dividend appears sustainable at present, investors should be cautious of the company’s past sustainability challenges.
Investors generally prefer companies with a consistent dividend policy, and while América Móvil’s dividend looks viable moving forward, its track record may give some cause for concern. It is important for investors to consider all factors when analyzing stock performance, including potential warning signs and high yield dividend stocks.
Overall, while the dividend is currently in a sustainable range, investors should remain cautious given the company’s history of pushing the boundaries of sustainability. It is recommended to conduct a comprehensive analysis to determine whether América Móvil is potentially over or undervalued, taking into account fair value estimates, risks, dividends, insider transactions, and financial health.