Mitsubishi Gas Chemical Company (TSE:4182) Has Announced A Dividend Of ¥50.00

Mitsubishi Gas Chemical Company, Inc. (TSE:4182) has announced that it will pay a dividend of ¥50.00 per share on the 5th of December. This takes the dividend yield to 4.1%, which shareholders will be pleased with.

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Mitsubishi Gas Chemical Company's Payment Could Potentially Have Solid Earnings Coverage

A big dividend yield for a few years doesn't mean much if it can't be sustained. Before making this announcement, Mitsubishi Gas Chemical Company was earning enough to cover the dividend, but it wasn't generating any free cash flows. No cash flows could definitely make returning cash to shareholders difficult, or at least mean the balance sheet will come under pressure.

Looking forward, earnings per share is forecast to rise by 9.2% over the next year. If the dividend continues on this path, the payout ratio could be 43% by next year, which we think can be pretty sustainable going forward.

See our latest analysis for Mitsubishi Gas Chemical Company

Mitsubishi Gas Chemical Company Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. The annual payment during the last 10 years was ¥28.00 in 2015, and the most recent fiscal year payment was ¥100.00. This means that it has been growing its distributions at 14% per annum over that time. So, dividends have been growing pretty quickly, and even more impressively, they haven't experienced any notable falls during this period.

The Dividend Looks Likely To Grow

The company's investors will be pleased to have been receiving dividend income for some time. Mitsubishi Gas Chemical Company has seen EPS rising for the last five years, at 18% per annum. While on an earnings basis, this company looks appealing as an income stock, the cash payout ratio still makes us cautious.

In Summary

Overall, this is probably not a great income stock, even though the dividend is being raised at the moment. While Mitsubishi Gas Chemical Company is earning enough to cover the payments, the cash flows are lacking. We don't think Mitsubishi Gas Chemical Company is a great stock to add to your portfolio if income is your focus.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For example, we've picked out 1 warning sign for Mitsubishi Gas Chemical Company that investors should know about before committing capital to this stock. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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