Mitsubishi UFJ Financial Group (TSE:8306) Is Paying Out A Larger Dividend Than Last Year

Mitsubishi UFJ Financial Group, Inc. (TSE:8306) has announced that it will be increasing its dividend from last year's comparable payment on the 30th of June to ¥35.00. Based on this payment, the dividend yield for the company will be 2.8%, which is fairly typical for the industry.

Check out our latest analysis for Mitsubishi UFJ Financial Group

Mitsubishi UFJ Financial Group's Payment Expected To Have Solid Earnings Coverage

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

Mitsubishi UFJ Financial Group has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. Based on Mitsubishi UFJ Financial Group's last earnings report, the payout ratio is at a decent 32%, 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 7.2%. If the dividend continues on this path, the future payout ratio could be 43% by next year, which we think can be pretty sustainable going forward.

Mitsubishi UFJ Financial Group Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. Since 2014, the dividend has gone from ¥14.00 total annually to ¥50.00. This means that it has been growing its distributions at 14% per annum over that time. Rapidly growing dividends for a long time is a very valuable feature for an income stock.

The Dividend Looks Likely To Grow

The company's investors will be pleased to have been receiving dividend income for some time. We are encouraged to see that Mitsubishi UFJ Financial Group has grown earnings per share at 22% per year over the past five years. A low payout ratio gives the company a lot of flexibility, and growing earnings also make it very easy for it to grow the dividend.

Mitsubishi UFJ Financial Group Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that Mitsubishi UFJ Financial Group is a strong income stock thanks to its track record and growing earnings. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All in all, this checks a lot of the boxes we look for when choosing an income stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Earnings growth generally bodes well for the future value of company dividend payments. See if the 10 Mitsubishi UFJ Financial Group analysts we track are forecasting continued growth with our free report on analyst estimates for the company. 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.