Medical System Network's (TSE:4350) Dividend Will Be ¥6.00

Medical System Network Co., Ltd. (TSE:4350) has announced that it will pay a dividend of ¥6.00 per share on the 9th of December. This means the annual payment is 2.4% of the current stock price, which is above the average for the industry.

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Medical System Network'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, Medical System Network was easily earning enough to cover the dividend. This means that most of what the business earns is being used to help it grow.

If the trend of the last few years continues, EPS will grow by 16.4% over the next 12 months. If the dividend continues on this path, the payout ratio could be 25% by next year, which we think can be pretty sustainable going forward.

Check out our latest analysis for Medical System Network

Dividend Volatility

The company's dividend history has been marked by instability, with at least one cut in the last 10 years. The annual payment during the last 10 years was ¥8.00 in 2015, and the most recent fiscal year payment was ¥12.00. This means that it has been growing its distributions at 4.1% per annum over that time. Modest growth in the dividend is good to see, but we think this is offset by historical cuts to the payments. It is hard to live on a dividend income if the company's earnings are not consistent.

The Dividend Looks Likely To Grow

Given that the dividend has been cut in the past, we need to check if earnings are growing and if that might lead to stronger dividends in the future. Medical System Network has seen EPS rising for the last five years, at 16% per annum. Medical System Network definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

We Really Like Medical System Network's Dividend

In summary, it is good to see that the dividend is staying consistent, and we don't think there is any reason to suspect this might change over the medium term. Distributions are quite easily covered by earnings, which are also being converted to cash flows. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For example, we've identified 3 warning signs for Medical System Network (1 shouldn't be ignored!) that you should be aware of before investing. 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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