Mitsui Chemicals' (TSE:4183) Dividend Will Be ¥75.00

The board of Mitsui Chemicals, Inc. (TSE:4183) has announced that it will pay a dividend of ¥75.00 per share on the 26th of June. This will take the dividend yield to an attractive 4.2%, providing a nice boost to shareholder returns.

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Mitsui Chemicals' 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, Mitsui Chemicals' dividend was comfortably covered by both cash flow and earnings. This indicates that a lot of the earnings are being reinvested into the business, with the aim of fueling growth.

Looking forward, earnings per share is forecast to rise by 21.6% over the next year. Assuming the dividend continues along recent trends, we think the payout ratio could be 52% by next year, which is in a pretty sustainable range.

Check out our latest analysis for Mitsui Chemicals

Mitsui Chemicals Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2015, the annual payment back then was ¥15.00, compared to the most recent full-year payment of ¥150.00. This means that it has been growing its distributions at 26% per annum over that time. Rapidly growing dividends for a long time is a very valuable feature for an income stock.

The Dividend's Growth Prospects Are Limited

The company's investors will be pleased to have been receiving dividend income for some time. Earnings have grown at around 3.0% a year for the past five years, which isn't massive but still better than seeing them shrink. Mitsui Chemicals is struggling to find viable investments, so it is returning more to shareholders. This isn't necessarily bad, but we wouldn't expect rapid dividend growth in the future.

Mitsui Chemicals Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that Mitsui Chemicals is a strong income stock thanks to its track record and growing earnings. Earnings are easily covering distributions, and the company is generating plenty of cash. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Taking the debate a bit further, we've identified 2 warning signs for Mitsui Chemicals that investors need to be conscious of moving forward. Is Mitsui Chemicals 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.