Mitsui Chemicals (TSE:4183) Is Due To Pay A Dividend Of ¥75.00

The board of Mitsui Chemicals, Inc. (TSE:4183) has announced that it will pay a dividend on the 26th of June, with investors receiving ¥75.00 per share. This makes the dividend yield 4.5%, which is above the industry average.

View our latest analysis for Mitsui Chemicals

Mitsui Chemicals' Payment Could Potentially Have Solid Earnings Coverage

If the payments aren't sustainable, a high yield for a few years won't matter that much. Prior to this announcement, Mitsui Chemicals' dividend was comfortably covered by both cash flow and earnings. This indicates that quite a large proportion of earnings is being invested back into the business.

Over the next year, EPS is forecast to expand by 21.3%. If the dividend continues along recent trends, we estimate the payout ratio will be 53%, which is in the range that makes us comfortable with the sustainability of the dividend.

Mitsui Chemicals Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. Since 2015, the dividend has gone from ¥15.00 total annually to ¥150.00. This implies that the company grew its distributions at a yearly rate of about 26% over that duration. It is good to see that there has been strong dividend growth, and that there haven't been any cuts for a long time.

Mitsui Chemicals May Find It Hard To Grow The Dividend

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. Growth of 3.0% may indicate that the company has limited investment opportunity so it is returning its earnings to shareholders instead. This isn't bad in itself, but unless earnings growth pick up we wouldn't expect dividends to grow either.

We Really Like Mitsui Chemicals' Dividend

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. 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.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For example, we've picked out 2 warning signs for Mitsui Chemicals 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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