MEISEI INDUSTRIALLtd's (TSE:1976) Dividend Will Be Reduced To ¥20.00

MEISEI INDUSTRIAL Co.,Ltd. (TSE:1976) has announced it will be reducing its dividend payable on the 25th of November to ¥20.00, which is 4.8% lower than what investors received last year for the same period. The dividend yield of 3.7% is still a nice boost to shareholder returns, despite the cut.

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MEISEI INDUSTRIALLtd's Future Dividend Projections Appear Well Covered By Earnings

A big dividend yield for a few years doesn't mean much if it can't be sustained. Before making this announcement, MEISEI INDUSTRIALLtd was easily earning enough to cover the dividend. As a result, a large proportion of what it earned was being reinvested back into the business.

If the trend of the last few years continues, EPS will grow by 13.8% over the next 12 months. If the dividend continues on this path, the payout ratio could be 36% by next year, which we think can be pretty sustainable going forward.

Check out our latest analysis for MEISEI INDUSTRIALLtd

MEISEI INDUSTRIALLtd Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. The annual payment during the last 10 years was ¥8.00 in 2015, and the most recent fiscal year payment was ¥60.00. This implies that the company grew its distributions at a yearly rate of about 22% over that duration. So, dividends have been growing pretty quickly, and even more impressively, they haven't experienced any notable falls during this period.

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. We are encouraged to see that MEISEI INDUSTRIALLtd has grown earnings per share at 14% per year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for MEISEI INDUSTRIALLtd's prospects of growing its dividend payments in the future.

We Really Like MEISEI INDUSTRIALLtd's Dividend

Overall, we think that MEISEI INDUSTRIALLtd could be a great option for a dividend investment, although we would have preferred if the dividend wasn't cut this year. Reducing the amount it is paying as a dividend can protect the company's balance sheet, keeping the dividend sustainable for longer. All of these factors considered, we think this has solid potential as a dividend stock.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. However, there are other things to consider for investors when analysing stock performance. You can also discover whether shareholders are aligned with insider interests by checking our visualisation of insider shareholdings and trades in MEISEI INDUSTRIALLtd stock. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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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.