Mebuki Financial GroupInc (TSE:7167) Will Pay A Larger Dividend Than Last Year At ¥9.00

Mebuki Financial Group,Inc. (TSE:7167) has announced that it will be increasing its dividend from last year's comparable payment on the 4th of June to ¥9.00. This takes the annual payment to 2.8% of the current stock price, which is about average for the industry.

See our latest analysis for Mebuki Financial GroupInc

Mebuki Financial GroupInc's Payment Expected To Have Solid Earnings Coverage

Unless the payments are sustainable, the dividend yield doesn't mean too much.

Having distributed dividends for at least 10 years, Mebuki Financial GroupInc has a long history of paying out a part of its earnings to shareholders. Past distributions do not necessarily guarantee future ones, but Mebuki Financial GroupInc's payout ratio of 25% is a good sign as this means that earnings decently cover dividends.

The next year is set to see EPS grow by 17.3%. Assuming the dividend continues along recent trends, we think the future payout ratio could be 27% by next year, which is in a pretty sustainable range.

Dividend Volatility

Although the company has a long dividend history, it has been cut at least once in the last 10 years. The dividend has gone from an annual total of ¥7.69 in 2015 to the most recent total annual payment of ¥18.00. This works out to be a compound annual growth rate (CAGR) of approximately 8.9% a year over that time. A reasonable rate of dividend growth is good to see, but we're wary that the dividend history is not as solid as we'd like, having been cut at least once.

The Dividend Has Growth Potential

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. Mebuki Financial GroupInc has impressed us by growing EPS at 8.2% per year over the past five years. 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

Overall, a dividend increase is always good, and we think that Mebuki Financial GroupInc is a strong income stock thanks to its track record and growing earnings. Earnings are easily covering distributions, and the company is generating plenty of cash. All of these factors considered, we think this has solid potential as a dividend stock.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. 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 Mebuki Financial GroupInc that you should be aware of before investing. If you are a dividend investor, you might also want to look at our curated list of high yield 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.