A Comprehensive Examination of Mexico Fund Inc's Dividend Performance and Sustainability
Mexico Fund Inc (MXF, Financial) recently announced a dividend of $0.2 per share, payable on 2023-10-26, with the ex-dividend date set for 2023-10-17. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's delve into Mexico Fund Inc's dividend performance and assess its sustainability.
What Does Mexico Fund Inc Do?
Mexico Fund Inc is a United States based non-diversified, closed-end management investment company. Its investment objective is to seek long-term capital appreciation. The fund seeks to achieve its objective through investment in securities, primarily equity, listed on the Mexican Stock Exchange. Its portfolio of investment consists of investment in different sectors such as auto parts, airports, building materials, chemical products, consumer products, energy, food and other sectors. The fund provides a vehicle to investors who wish to invest in Mexican companies through a managed non-diversified portfolio as part of their overall investment program.
A Glimpse at Mexico Fund Inc's Dividend History
Mexico Fund Inc has maintained a consistent dividend payment record since 2004. Dividends are currently distributed on a quarterly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Mexico Fund Inc's Dividend Yield and Growth
As of today, Mexico Fund Inc currently has a 12-month trailing dividend yield of 5.02% and a 12-month forward dividend yield of 5.15%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, Mexico Fund Inc's annual dividend growth rate was -10.40%. Extended to a five-year horizon, this rate increased to -3.50% per year. Based on Mexico Fund Inc's dividend yield and five-year growth rate, the 5-year yield on cost of Mexico Fund Inc stock as of today is approximately 4.20%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-04-30, Mexico Fund Inc's dividend payout ratio is 0.18.
Mexico Fund Inc's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Mexico Fund Inc's profitability 2 out of 10 as of 2023-04-30, suggesting the dividend may not be sustainable. The company has reported net profit in 3 years out of past 10 years.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Mexico Fund Inc's growth rank of 2 out of 10 suggests that the company has poor growth prospects and thus, the dividend may not be sustainable.
Revenue is the lifeblood of any company, and Mexico Fund Inc's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Mexico Fund Inc's revenue has increased by approximately 3.10% per year on average, a rate that underperforms approximately 53.3% of global competitors.
The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, Mexico Fund Inc's earnings increased by approximately 4.20% per year on average, a rate that underperforms approximately 52.93% of global competitors.
Conclusion
While Mexico Fund Inc's dividend yield and consistent payment record may be appealing, the company's overall performance raises questions about the sustainability of its dividends. The low profitability and growth ranks, coupled with a declining dividend growth rate, suggest possible challenges in maintaining dividend payments in the long term. As always, investors are advised to conduct thorough research and consider the company's overall financial health before making investment decisions.
GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
