METAWATER's (TSE:9551) Upcoming Dividend Will Be Larger Than Last Year's

METAWATER Co., Ltd.'s (TSE:9551) dividend will be increasing from last year's payment of the same period to ¥26.00 on 6th of June. This will take the annual payment to 2.6% of the stock price, which is above what most companies in the industry pay.

METAWATER's Payment Could Potentially Have Solid Earnings Coverage

If the payments aren't sustainable, a high yield for a few years won't matter that much. Based on the last payment, METAWATER was earning enough to cover the dividend, but free cash flows weren't positive. With the company not bringing in any cash, paying out to shareholders is bound to become difficult at some point.

Looking forward, earnings per share is forecast to rise by 9.8% over the next year. If the dividend continues along recent trends, we estimate the payout ratio will be 33%, which is in the range that makes us comfortable with the sustainability of the dividend.

View our latest analysis for METAWATER

METAWATER Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2015, the dividend has gone from ¥29.00 total annually to ¥52.00. This means that it has been growing its distributions at 6.0% per annum over that time. Companies like this can be very valuable over the long term, if the decent rate of growth can be maintained.

METAWATER Could Grow Its Dividend

The company's investors will be pleased to have been receiving dividend income for some time. METAWATER has seen EPS rising for the last five years, at 7.1% per annum. With a decent amount of growth and a low payout ratio, we think this bodes well for METAWATER's prospects of growing its dividend payments in the future.

Our Thoughts On METAWATER's Dividend

Overall, we always like to see the dividend being raised, but we don't think METAWATER will make a great income stock. While METAWATER is earning enough to cover the payments, the cash flows are lacking. Overall, we don't think this company has the makings of a good income stock.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. However, there are other things to consider for investors when analysing stock performance. For instance, we've picked out 1 warning sign for METAWATER that investors should take into consideration. 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.