Mitsui Matsushima Holdings (TSE:1518) Will Pay A Dividend Of ¥50.00

The board of Mitsui Matsushima Holdings Co., Ltd. (TSE:1518) has announced that it will pay a dividend on the 5th of December, with investors receiving ¥50.00 per share. Despite this raise, the dividend yield of 1.9% is only a modest boost to shareholder returns.

While the dividend yield is important for income investors, it is also important to consider any large share price moves, as this will generally outweigh any gains from distributions. Investors will be pleased to see that Mitsui Matsushima Holdings' stock price has increased by 65% in the last 3 months, which is good for shareholders and can also explain a decrease in the dividend yield.

Check out our latest analysis for Mitsui Matsushima Holdings

Mitsui Matsushima Holdings' Payment Has Solid Earnings Coverage

It would be nice for the yield to be higher, but we should also check if higher levels of dividend payment would be sustainable. However, prior to this announcement, Mitsui Matsushima Holdings' dividend was comfortably covered by both cash flow and earnings. As a result, a large proportion of what it earned was being reinvested back into the business.

Over the next year, EPS could expand by 49.1% if recent trends continue. If the dividend continues on this path, the payout ratio could be 6.4% by next year, which we think can be pretty sustainable going forward.

Dividend Volatility

Although the company has a long dividend history, it has been cut at least once in the last 10 years. The annual payment during the last 10 years was ¥40.00 in 2014, and the most recent fiscal year payment was ¥100.00. This works out to be a compound annual growth rate (CAGR) of approximately 9.6% 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. Mitsui Matsushima Holdings might have put its house in order since then, but we remain cautious.

The Dividend Looks Likely To Grow

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. Mitsui Matsushima Holdings has seen EPS rising for the last five years, at 49% per annum. Rapid earnings growth and a low payout ratio suggest this company has been effectively reinvesting in its business. Should that continue, this company could have a bright future.

Mitsui Matsushima Holdings Looks Like A Great Dividend Stock

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Case in point: We've spotted 3 warning signs for Mitsui Matsushima Holdings (of which 1 makes us a bit uncomfortable!) you should know about. Is Mitsui Matsushima Holdings not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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