There's A Lot To Like About MEISEI INDUSTRIALLtd's (TSE:1976) Upcoming JP¥15.00 Dividend

It looks like MEISEI INDUSTRIAL Co.,Ltd. (TSE:1976) is about to go ex-dividend in the next 2 days. Typically, the ex-dividend date is one business day before the record date which is the date on which a company determines the shareholders eligible to receive a dividend. The ex-dividend date is important because any transaction on a stock needs to have been settled before the record date in order to be eligible for a dividend. Thus, you can purchase MEISEI INDUSTRIALLtd's shares before the 27th of September in order to receive the dividend, which the company will pay on the 25th of November.

The company's upcoming dividend is JP¥15.00 a share, following on from the last 12 months, when the company distributed a total of JP¥41.00 per share to shareholders. Calculating the last year's worth of payments shows that MEISEI INDUSTRIALLtd has a trailing yield of 3.5% on the current share price of JP¥1180.00. If you buy this business for its dividend, you should have an idea of whether MEISEI INDUSTRIALLtd's dividend is reliable and sustainable. As a result, readers should always check whether MEISEI INDUSTRIALLtd has been able to grow its dividends, or if the dividend might be cut.

View our latest analysis for MEISEI INDUSTRIALLtd

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Fortunately MEISEI INDUSTRIALLtd's payout ratio is modest, at just 35% of profit. That said, even highly profitable companies sometimes might not generate enough cash to pay the dividend, which is why we should always check if the dividend is covered by cash flow. It distributed 36% of its free cash flow as dividends, a comfortable payout level for most companies.

It's encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don't drop precipitously.

Click here to see how much of its profit MEISEI INDUSTRIALLtd paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If earnings fall far enough, the company could be forced to cut its dividend. With that in mind, we're encouraged by the steady growth at MEISEI INDUSTRIALLtd, with earnings per share up 7.1% on average over the last five years. Management have been reinvested more than half of the company's earnings within the business, and the company has been able to grow earnings with this retained capital. Organisations that reinvest heavily in themselves typically get stronger over time, which can bring attractive benefits such as stronger earnings and dividends.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. MEISEI INDUSTRIALLtd has delivered 21% dividend growth per year on average over the past 10 years. It's encouraging to see the company lifting dividends while earnings are growing, suggesting at least some corporate interest in rewarding shareholders.

The Bottom Line

From a dividend perspective, should investors buy or avoid MEISEI INDUSTRIALLtd? Earnings per share growth has been growing somewhat, and MEISEI INDUSTRIALLtd is paying out less than half its earnings and cash flow as dividends. This is interesting for a few reasons, as it suggests management may be reinvesting heavily in the business, but it also provides room to increase the dividend in time. It might be nice to see earnings growing faster, but MEISEI INDUSTRIALLtd is being conservative with its dividend payouts and could still perform reasonably over the long run. There's a lot to like about MEISEI INDUSTRIALLtd, and we would prioritise taking a closer look at it.

Keen to explore more data on MEISEI INDUSTRIALLtd's financial performance? Check out our visualisation of its historical revenue and earnings growth.

If you're in the market for strong dividend payers, we recommend checking 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.