Medical Data Vision (TSE:3902) Has Affirmed Its Dividend Of ¥6.50

Medical Data Vision Co., Ltd. (TSE:3902) has announced that it will pay a dividend of ¥6.50 per share on the 28th of March. This means the annual payment is 1.3% of the current stock price, which is above the average for the industry.

Check out our latest analysis for Medical Data Vision

Medical Data Vision's Projected Earnings Seem Likely To Cover Future Distributions

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. Prior to this announcement, Medical Data Vision's dividend was only 55% of earnings, however it was paying out 241% of free cash flows. The company might be more focused on returning cash to shareholders, but paying out this much of its cash flow could expose the dividend to being cut in the future.

Looking forward, earnings per share is forecast to rise by 22.5% over the next year. If the dividend continues on this path, the payout ratio could be 53% by next year, which we think can be pretty sustainable going forward.

Medical Data Vision Doesn't Have A Long Payment History

The dividend's track record has been pretty solid, but with only 5 years of history we want to see a few more years of history before making any solid conclusions. Since 2019, the annual payment back then was ¥3.00, compared to the most recent full-year payment of ¥6.50. This implies that the company grew its distributions at a yearly rate of about 17% over that duration. Medical Data Vision has been growing its dividend quite rapidly, which is exciting. However, the short payment history makes us question whether this performance will persist across a full market cycle.

We Could See Medical Data Vision's Dividend Growing

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Medical Data Vision has impressed us by growing EPS at 7.4% per year over the past five years. The company is paying out a lot of its cash as a dividend, but it looks okay based on the payout ratio.

Our Thoughts On Medical Data Vision's Dividend

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Medical Data Vision's payments, as there could be some issues with sustaining them into the future. While Medical Data Vision is earning enough to cover the payments, the cash flows are lacking. We would probably look elsewhere for an income investment.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Just as an example, we've come across 2 warning signs for Medical Data Vision you should be aware of, and 1 of them is concerning. Is Medical Data Vision not quite the opportunity you were looking for? Why not check out 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.