Medical System Network (TSE:4350) Has Affirmed Its Dividend Of ¥6.00

The board of Medical System Network Co., Ltd. (TSE:4350) has announced that it will pay a dividend on the 9th of December, with investors receiving ¥6.00 per share. This makes the dividend yield 2.5%, which will augment investor returns quite nicely.

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Medical System Network's Payment Could Potentially Have Solid Earnings Coverage

A big dividend yield for a few years doesn't mean much if it can't be sustained. Before making this announcement, Medical System Network was easily earning enough to cover the dividend. This means that most of its earnings are being retained to grow the business.

Looking forward, earnings per share could rise by 7.7% over the next year if the trend from the last few years continues. Assuming the dividend continues along recent trends, we think the payout ratio could be 29% by next year, which is in a pretty sustainable range.

View our latest analysis for Medical System Network

Dividend Volatility

The company has a long dividend track record, but it doesn't look great with cuts in the past. The dividend has gone from an annual total of ¥8.00 in 2015 to the most recent total annual payment of ¥12.00. This means that it has been growing its distributions at 4.1% per annum over that time. The dividend has seen some fluctuations in the past, so even though the dividend was raised this year, we should remember that it has been cut in the past.

We Could See Medical System Network's Dividend Growing

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. Medical System Network has impressed us by growing EPS at 7.7% per year over the past five years. A low payout ratio and decent growth suggests that the company is reinvesting well, and it also has plenty of room to increase the dividend over time.

Our Thoughts On Medical System Network's Dividend

Overall, a consistent dividend is a good thing, and we think that Medical System Network has the ability to continue this into the future. While the payout ratios are a good sign, we are less enthusiastic about the company's dividend record. This looks like it could be a good dividend stock going forward, but we would note that the payout ratio has been at higher levels in the past so it could happen again.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. 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 4 warning signs for Medical System Network (of which 1 makes us a bit uncomfortable!) you should know about. Is Medical System Network not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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