Mitsubishi Paper Mills' (TSE:3864) Dividend Will Be ¥10.00

Mitsubishi Paper Mills Limited (TSE:3864) has announced that it will pay a dividend of ¥10.00 per share on the 10th of June. This means the dividend yield will be fairly typical at 2.1%.

See our latest analysis for Mitsubishi Paper Mills

Mitsubishi Paper Mills' Projected Earnings Seem Likely To Cover Future Distributions

Solid dividend yields are great, but they only really help us if the payment is sustainable. However, prior to this announcement, Mitsubishi Paper Mills' dividend was comfortably covered by both cash flow and earnings. This means that most of its earnings are being retained to grow the business.

Looking forward, earnings per share could rise by 28.7% over the next year if the trend from the last few years continues. If the dividend continues on this path, the payout ratio could be 11% by next year, which we think can be pretty sustainable going forward.

Mitsubishi Paper Mills Doesn't Have A Long Payment History

Mitsubishi Paper Mills' dividend has been pretty stable for a little while now, but we will continue to be cautious until it has been demonstrated for a few more years. The dividend has gone from an annual total of ¥5.00 in 2017 to the most recent total annual payment of ¥10.00. This works out to be a compound annual growth rate (CAGR) of approximately 10% a year over that time. Mitsubishi Paper Mills 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.

The Dividend Looks Likely To Grow

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. It's encouraging to see that Mitsubishi Paper Mills has been growing its earnings per share at 29% a year over the past five years. A low payout ratio gives the company a lot of flexibility, and growing earnings also make it very easy for it to grow the dividend.

Mitsubishi Paper Mills Looks Like A Great Dividend Stock

Overall, we think that this is a great income investment, and we think that maintaining the dividend this year may have been a conservative choice. 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.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. As an example, we've identified 1 warning sign for Mitsubishi Paper Mills that you should be aware of before investing. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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