Mitsubishi UFJ Financial Group's (TSE:8306) Shareholders Will Receive A Bigger Dividend Than Last Year

Mitsubishi UFJ Financial Group, Inc. (TSE:8306) will increase its dividend from last year's comparable payment on the 5th of December to ¥25.00. Based on this payment, the dividend yield for the company will be 2.8%, which is fairly typical for the industry.

See our latest analysis for Mitsubishi UFJ Financial Group

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

Unless the payments are sustainable, the dividend yield doesn't mean too much.

Mitsubishi UFJ Financial Group has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. Past distributions do not necessarily guarantee future ones, but Mitsubishi UFJ Financial Group's payout ratio of 28% is a good sign as this means that earnings decently cover dividends.

Over the next year, EPS is forecast to expand by 9.0%. If the dividend continues along recent trends, we estimate the future payout ratio will be 35%, which is in the range that makes us comfortable with the sustainability of the dividend.

Mitsubishi UFJ Financial Group Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2014, the dividend has gone from ¥14.00 total annually to ¥50.00. This implies that the company grew its distributions at a yearly rate of about 14% over that duration. We can see that payments have shown some very nice upward momentum without faltering, which provides some reassurance that future payments will also be reliable.

The Dividend Looks Likely To Grow

Investors could be attracted to the stock based on the quality of its payment history. We are encouraged to see that Mitsubishi UFJ Financial Group has grown earnings per share at 18% per year over the past five years. A low payout ratio and decent growth suggests that the company is reinvesting well, and it also has plenty of room to increase the dividend over time.

Mitsubishi UFJ Financial Group Looks Like A Great Dividend Stock

Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All of these factors considered, we think this has solid potential as a dividend stock.

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. Companies that are growing earnings tend to be the best dividend stocks over the long term. See what the 9 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.

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