Medical Data Vision (TSE:3902) Is Due To Pay A 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. The dividend yield will be 1.7% based on this payment which is still above the industry average.

Check out our latest analysis for Medical Data Vision

Medical Data Vision's Future Dividends May Potentially Be At Risk

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. Before making this announcement, the company's dividend was much higher than its earnings. It will be difficult to sustain this level of payout so we wouldn't be confident about this continuing.

Earnings per share is forecast to rise by 40.6% over the next year. However, if the dividend continues along recent trends, it could start putting pressure on the balance sheet with the payout ratio getting very high over the next year.

Medical Data Vision Is Still Building Its Track Record

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. The annual payment during the last 5 years was ¥3.00 in 2019, and the most recent fiscal year payment was ¥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.

Dividend Growth Potential Is Shaky

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. However, things aren't all that rosy. Medical Data Vision's EPS has fallen by approximately 59% per year during the past five years. Dividend payments are likely to come under some pressure unless EPS can pull out of the nosedive it is in. However, the next year is actually looking up, with earnings set to rise. We would just wait until it becomes a pattern before getting too excited.

Medical Data Vision's Dividend Doesn't Look Great

Overall, while some might be pleased that the dividend wasn't cut, we think this may help Medical Data Vision make more consistent payments in the future. The company isn't making enough to be paying as much as it is, and the other factors don't look particularly promising either. Considering all of these factors, we wouldn't rely on this dividend if we wanted to live on the income.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For example, we've picked out 4 warning signs for Medical Data Vision that investors should know about before committing capital to this stock. 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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