Mitsubishi UFJ Financial Group (TSE:8306) Is Increasing Its Dividend To ¥25.00

The board of Mitsubishi UFJ Financial Group, Inc. (TSE:8306) has announced that it will be paying its dividend of ¥25.00 on the 5th of December, an increased payment from last year's comparable dividend. This makes the dividend yield about the same as the industry average at 3.4%.

See our latest analysis for Mitsubishi UFJ Financial Group

Mitsubishi UFJ Financial Group's Earnings Will Easily Cover The Distributions

Solid dividend yields are great, but they only really help us if the payment is sustainable.

Having distributed dividends for at least 10 years, Mitsubishi UFJ Financial Group has a long history of paying out a part of its earnings to shareholders. Taking data from its last earnings report, calculating for the company's payout ratio shows 37%, which means that Mitsubishi UFJ Financial Group would be able to pay its last dividend without pressure on the balance sheet.

Over the next year, EPS is forecast to expand by 12.2%. Assuming the dividend continues along recent trends, we think the future payout ratio could be 39% by next year, which is in a pretty sustainable range.

Mitsubishi UFJ Financial Group Has A Solid Track Record

The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. Since 2014, the annual payment back then was ¥14.00, compared to the most recent full-year payment of ¥50.00. This means that it has been growing its distributions at 14% per annum over that time. It is good to see that there has been strong dividend growth, and that there haven't been any cuts for a long time.

The Dividend Looks Likely To Grow

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. It's encouraging to see that Mitsubishi UFJ Financial Group has been growing its earnings per share at 13% a year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for Mitsubishi UFJ Financial Group's prospects of growing its dividend payments in the future.

We Really Like Mitsubishi UFJ Financial Group's Dividend

Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. Earnings are easily covering distributions, and the company is generating plenty of cash. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Companies that are growing earnings tend to be the best dividend stocks over the long term. See what the 11 analysts we track are forecasting for Mitsubishi UFJ Financial Group for free with public analyst estimates for the company. Is Mitsubishi UFJ Financial Group 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.