Mitsui Fudosan Co., Ltd. (TSE:8801) will increase its dividend from last year's comparable payment on the 1st of July to ¥37.00. This takes the annual payment to 1.7% of the current stock price, which unfortunately is below what the industry is paying.
See our latest analysis for Mitsui Fudosan
Mitsui Fudosan's Earnings Easily Cover The Distributions
Even a low dividend yield can be attractive if it is sustained for years on end. Based on the last payment, Mitsui Fudosan was paying only paying out a fraction of earnings, but the payment was a massive 5,458% of cash flows. While the business may be attempting to set a balanced dividend policy, a cash payout ratio this high might expose the dividend to being cut if the business ran into some challenges.
Over the next year, EPS is forecast to expand by 25.0%. If the dividend continues on this path, the payout ratio could be 27% by next year, which we think can be pretty sustainable going forward.
Mitsui Fudosan Has A Solid Track Record
The company has an extended history of paying stable dividends. Since 2014, the dividend has gone from ¥22.00 total annually to ¥70.00. This means that it has been growing its distributions at 12% 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.
Mitsui Fudosan May Find It Hard To Grow The Dividend
Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Earnings has been rising at 4.2% per annum over the last five years, which admittedly is a bit slow. While growth may be thin on the ground, Mitsui Fudosan could always pay out a higher proportion of earnings to increase shareholder returns.
Our Thoughts On Mitsui Fudosan's Dividend
Overall, this is probably not a great income stock, even though the dividend is being raised at the moment. While the low payout ratio is a redeeming feature, this is offset by the minimal cash to cover the payments. This company is not in the top tier of income providing stocks.
Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For example, we've identified 2 warning signs for Mitsui Fudosan (1 makes us a bit uncomfortable!) that you should be aware of before investing. If you are a dividend investor, you might also want to look at our curated list of high yield 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.
About TSE:8801
Average dividend payer and slightly overvalued.
