Mebuki Financial GroupInc (TSE:7167) Is Increasing Its Dividend To ¥14.00

Mebuki Financial Group,Inc. (TSE:7167) will increase its dividend from last year's comparable payment on the 3rd of June to ¥14.00. This takes the annual payment to 2.8% of the current stock price, which is about average for the industry.

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Mebuki Financial GroupInc's Dividend Forecasted To Be Well Covered By Earnings

Solid dividend yields are great, but they only really help us if the payment is sustainable.

Mebuki Financial GroupInc has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. Taking data from its last earnings report, calculating for the company's payout ratio shows 29%, which means that Mebuki Financial GroupInc would be able to pay its last dividend without pressure on the balance sheet.

The next year is set to see EPS grow by 12.4%. Assuming the dividend continues along recent trends, we think the future payout ratio could be 33% by next year, which is in a pretty sustainable range.

Check out our latest analysis for Mebuki Financial GroupInc

Dividend Volatility

The company has a long dividend track record, but it doesn't look great with cuts in the past. The dividend has gone from an annual total of ¥9.4 in 2015 to the most recent total annual payment of ¥28.00. This works out to be a compound annual growth rate (CAGR) of approximately 12% a year over that time. Mebuki Financial GroupInc has grown distributions at a rapid rate despite cutting the dividend at least once in the past. Companies that cut once often cut again, so we would be cautious about buying this stock solely for the dividend income.

The Dividend Looks Likely To Grow

With a relatively unstable dividend, it's even more important to evaluate if earnings per share is growing, which could point to a growing dividend in the future. Mebuki Financial GroupInc has seen EPS rising for the last five years, at 19% per annum. Growth in EPS bodes well for the dividend, as does the low payout ratio that the company is currently reporting.

Mebuki Financial GroupInc Looks Like A Great Dividend Stock

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. Distributions are quite easily covered by earnings, which are also being converted to cash flows. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For example, we've picked out 1 warning sign for Mebuki Financial GroupInc that investors should know about before committing capital to this stock. Is Mebuki Financial GroupInc 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.