Monarch Casino & Resort, Inc. (NASDAQ:MCRI) has announced that it will pay a dividend of $0.30 per share on the 15th of December. This means the annual payment will be 1.5% of the current stock price, which is lower than the industry average.

See our latest analysis for Monarch Casino & Resort

The dividend yield is a little bit low, but sustainability of the payments is also an important part of evaluating an income stock. However, Monarch Casino & Resort’s earnings easily cover the dividend. This means that most of what the business earns is being used to help it grow.

Looking forward, earnings per share is forecast to rise by 15.0% over the next year. Assuming the dividend continues along recent trends, we think the payout ratio could be 22% by next year, which is in a pretty sustainable range.

The dividend has been pretty stable looking back, but the company hasn’t been paying one for very long. This makes it tough to judge how it would fare through a full economic cycle. There hasn’t been much of a change in the dividend over the last 2 years. Modest dividend growth is good to see, especially with the payments being relatively stable. However, the payment history is relatively short and we wouldn’t want to rely on this dividend too much.

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. It’s encouraging to see that Monarch Casino & Resort has been growing its earnings per share at 21% a year over the past five years. A low payout ratio gives the company a lot of flexibility, and growing earnings also make it very easy for it to grow the dividend.

Overall, we like to see the dividend staying consistent, and we think Monarch Casino & Resort might even raise payments in the future. 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.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. As an example, we’ve identified 1 warning sign for Monarch Casino & Resort that you should be aware of before investing. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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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.