Mebuki Financial GroupInc's (TSE:7167) Dividend Will Be Increased To ¥7.00

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 December to ¥7.00. The payment will take the dividend yield to 2.6%, which is in line with the average for the industry.

See our latest analysis for Mebuki Financial GroupInc

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

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 27% is a good sign as this means that earnings decently cover dividends.

Over the next year, EPS is forecast to expand by 17.3%. Assuming the dividend continues along recent trends, we think the future payout ratio could be 26% by next year, which is in a pretty sustainable range.

Dividend Volatility

The company's dividend history has been marked by instability, with at least one cut in the last 10 years. Since 2014, the annual payment back then was ¥7.69, compared to the most recent full-year payment of ¥14.00. This works out to be a compound annual growth rate (CAGR) of approximately 6.2% a year over that time. We have seen cuts in the past, so while the growth looks promising we would be a little bit cautious about its track record.

Mebuki Financial GroupInc May Find It Hard To Grow The Dividend

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. Earnings per share has been crawling upwards at 2.7% per year. If Mebuki Financial GroupInc is struggling to find viable investments, it always has the option to increase its payout ratio to pay more to shareholders.

Our Thoughts On Mebuki Financial GroupInc's Dividend

Overall, it's great to see the dividend being raised and that it is still in a sustainable range. The payout ratio looks good, but unfortunately the company's dividend track record isn't stellar. The payment isn't stellar, but it could make a decent addition to a dividend portfolio.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Taking the debate a bit further, we've identified 1 warning sign for Mebuki Financial GroupInc that investors need to be conscious of moving forward. 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.