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 ¥9.00 on the 4th of June, an increased payment from last year's comparable dividend. Even though the dividend went up, the yield is still quite low at only 2.4%.

Mebuki Financial GroupInc's Earnings Will Easily Cover The Distributions

It would be nice for the yield to be higher, but we should also check if higher levels of dividend payment would be sustainable.

Mebuki Financial GroupInc has a long history of paying out dividends, with its current track record at a minimum of 10 years. Using data from its latest earnings report, Mebuki Financial GroupInc's payout ratio sits at 22%, an extremely comfortable number that shows that it can pay its dividend.

The next year is set to see EPS grow by 15.6%. 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.

Check out our latest analysis for Mebuki Financial GroupInc

Dividend Volatility

Although the company has a long dividend history, it has been cut at least once in the last 10 years. Since 2015, the dividend has gone from ¥7.69 total annually to ¥18.00. This works out to be a compound annual growth rate (CAGR) of approximately 8.9% 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.

We Could See Mebuki Financial GroupInc's Dividend Growing

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. It's encouraging to see that Mebuki Financial GroupInc has been growing its earnings per share at 7.0% a 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.

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.