Mebuki Financial GroupInc's (TSE:7167) Dividend Will Be Increased To ¥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 2.7% of the current stock price, which is about average for the industry.

See our latest analysis for Mebuki Financial GroupInc

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

While it is always good to see a solid dividend yield, we should also consider whether the payment is feasible.

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. While past data isn't a guarantee for the future, Mebuki Financial GroupInc's latest earnings report puts its payout ratio at 12%, showing that the company can pay out its dividends comfortably.

The next year is set to see EPS grow by 15.8%. 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. Since 2014, the annual payment back then was ¥7.69, compared to the most recent full-year payment of ¥18.00. This implies that the company grew its distributions at a yearly rate of about 8.9% over that duration. It's good to see the dividend growing at a decent rate, but the dividend has been cut at least once in the past. Mebuki Financial GroupInc might have put its house in order since then, but we remain cautious.

Mebuki Financial GroupInc Could Grow Its Dividend

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. We are encouraged to see that Mebuki Financial GroupInc has grown earnings per share at 7.8% 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.

In Summary

Overall, this is a reasonable dividend, and it being raised is an added bonus. The payout ratio looks good, but unfortunately the company's dividend track record isn't stellar. The dividend looks okay, but there have been some issues in the past, so we would be a little bit cautious.

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. For example, we've picked out 1 warning sign for Mebuki Financial GroupInc that investors should know about before committing capital to this stock. 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.