Mani (TSE:7730) Has Announced That It Will Be Increasing Its Dividend To ¥23.00

Mani, Inc.'s (TSE:7730) periodic dividend will be increasing on the 6th of November to ¥23.00, with investors receiving 9.5% more than last year's ¥21.00. This will take the annual payment to 1.7% of the stock price, which is above what most companies in the industry pay.

View our latest analysis for Mani

Mani's Payment Has Solid Earnings Coverage

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. Prior to this announcement, Mani's dividend was only 30% of earnings, however it was paying out 178% of free cash flows. The business might be trying to strike a balance between returning cash to shareholders and reinvesting back into the business, but this high of a payout ratio could definitely force the dividend to be cut if the company runs into a bit of a tough spot.

The next year is set to see EPS grow by 7.5%. If the dividend continues along recent trends, we estimate the payout ratio will be 60%, which is in the range that makes us comfortable with the sustainability of the dividend.

Dividend Volatility

The company has a long dividend track record, but it doesn't look great with cuts in the past. Since 2014, the annual payment back then was ¥6.89, compared to the most recent full-year payment of ¥37.00. This means that it has been growing its distributions at 18% per annum over that time. Despite the rapid growth in the dividend over the past number of years, we have seen the payments go down the past as well, so that makes us cautious.

Dividend Growth May Be Hard To Achieve

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. Earnings per share has been crawling upwards at 2.1% per year. If Mani 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 Mani's payments are rock solid. While Mani is earning enough to cover the payments, the cash flows are lacking. This company is not in the top tier of income providing stocks.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For instance, we've picked out 1 warning sign for Mani that investors should take into consideration. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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