Marubeni Construction Material LeaseLtd's (TSE:9763) Dividend Will Be ¥65.00

Marubeni Construction Material Lease Co.,Ltd. (TSE:9763) has announced that it will pay a dividend of ¥65.00 per share on the 9th of December. This takes the dividend yield to 4.2%, which shareholders will be pleased with.

View our latest analysis for Marubeni Construction Material LeaseLtd

Marubeni Construction Material LeaseLtd's Dividend Is Well Covered By Earnings

If the payments aren't sustainable, a high yield for a few years won't matter that much. Before making this announcement, Marubeni Construction Material LeaseLtd was paying a whopping 247% as a dividend, but this only made up 31% of its overall earnings. While the business may be attempting to set a balanced dividend policy, a cash payout ratio this high might expose the dividend to being cut if the business ran into some challenges.

Over the next year, EPS could expand by 3.7% if recent trends continue. If the dividend continues on this path, the payout ratio could be 37% by next year, which we think can be pretty sustainable going forward.

Marubeni Construction Material LeaseLtd Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. Since 2014, the annual payment back then was ¥40.00, compared to the most recent full-year payment of ¥130.00. This means that it has been growing its distributions at 13% per annum over that time. 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.

Marubeni Construction Material LeaseLtd May Find It Hard To Grow The Dividend

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Earnings have grown at around 3.7% a year for the past five years, which isn't massive but still better than seeing them shrink. If Marubeni Construction Material LeaseLtd is struggling to find viable investments, it always has the option to increase its payout ratio to pay more to shareholders.

In Summary

In summary, while it's always good to see the dividend being raised, we don't think Marubeni Construction Material LeaseLtd's payments are rock solid. While Marubeni Construction Material LeaseLtd 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.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. As an example, we've identified 2 warning signs for Marubeni Construction Material LeaseLtd that you should be aware of before investing. Is Marubeni Construction Material LeaseLtd not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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