What the F-Score says about Marshall Motor Holdings’s (LON:MMH) chunky dividend payment

Marshall Motor Holdings (LON:MMH) is an adventurous super stock company in the Consumer Cyclicals sector that pays out a rolling 4.07% of its share price in dividend payments. 

On the face of it, this seems like an attractive yield, but I'd like to know whether or not it is sustainable.

One way to check is to see whether its financial health is improving or deteriorating. We want to avoid companies with declining financial health whose dividend payments might be at risk and invest in companies with improving fundamentals whose dividend payments are well supported.

This is where the Piotroski F-Score comes in.

Why you need to know the Piotroski F-Score

The F-Score is a simple indicator to highlight stocks showing the most likely prospects for outperformance amongst a basket of apparently undervalued companies. It essentially is an entire quality and fundamental momentum screen in a single number, meaning it as a filter on top of almost any strategy can help to increase returns and reduce risk.

The F-Score is made up of nine checks split up into three main areas of financial analysis. First is profitability, where it examines operating profits and cash flow to make sure the business can sustain itself and pay dividends. Then come three checks on the capital structure of a business, followed by a final look at the firm’s operating efficiency.

Marshall Motor Holdings (LON:MMH), its F-Score, and what you need to do about it

Stockopedia applies algorithms to its stream of financial data to automatically calculate the Piotroski F-Score for every stock on the market. It shows that Marshall Motor Holdings (LON:MMH) scores 9 out of a possible 9. By investing in companies scoring 8 or 9 by these measures, Piotroski showed that, over a 20-year test period through to 1996, the return earned by a value-focused investor could be increased by an astounding 7.5% each year. Even better, it suggests that the company is well-placed to continue to pay out attractive dividends.

What does this mean for potential investors?

Marshall Motor Holdings has an F-Score that suggests it could be a promising investment candidate worthy of further research - but it's only a first step. Higher F-Score stocks can still have weaknesses and may trade at premium prices compared to other stocks. We've identified some areas of concern with Marshall Motor Holdings that you can find out about here.