Mebuki Financial GroupInc's (TSE:7167) Shareholders Will Receive A Bigger Dividend Than Last Year

The board of Mebuki Financial Group,Inc. (TSE:7167) has announced that it will be paying its dividend of ¥7.00 on the 4th of December, an increased payment from last year's comparable dividend. Even though the dividend went up, the yield is still quite low at only 2.3%.

See our latest analysis for Mebuki Financial GroupInc

Mebuki Financial GroupInc's Earnings Will Easily Cover The Distributions

The dividend yield is a little bit low, but sustainability of the payments is also an important part of evaluating an income stock.

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. Based on Mebuki Financial GroupInc's last earnings report, the payout ratio is at a decent 37%, meaning that the company is able to pay out its dividend with a bit of room to spare.

The next year is set to see EPS grow by 15.9%. 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

The company has a long dividend track record, but it doesn't look great with cuts in the past. 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. 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 May Find It Hard To Grow The Dividend

Given that the dividend has been cut in the past, we need to check if earnings are growing and if that might lead to stronger dividends in the future. Unfortunately, Mebuki Financial GroupInc's earnings per share has been essentially flat over the past five years, which means the dividend may not be increased each 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, this is a reasonable dividend, and it being raised is an added bonus. The dividend has been at reasonable levels historically, but that hasn't translated into a consistent payment. The payment isn't stellar, but it could make a decent addition to a dividend portfolio.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. As an example, we've identified 1 warning sign for Mebuki Financial GroupInc that you should be aware of before investing. 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.

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