Mitsui Fudosan (TSE:8801) Is Paying Out A Larger Dividend Than Last Year

Mitsui Fudosan Co., Ltd. (TSE:8801) will increase its dividend from last year's comparable payment on the 3rd of December to ¥16.50. This takes the annual payment to 2.5% of the current stock price, which is about average for the industry.

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Mitsui Fudosan's Payment Could Potentially Have Solid Earnings Coverage

We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue. Before making this announcement, Mitsui Fudosan was easily earning enough to cover the dividend. This means that most of its earnings are being retained to grow the business.

Over the next year, EPS is forecast to expand by 6.6%. If the dividend continues along recent trends, we estimate the payout ratio will be 37%, which is in the range that makes us comfortable with the sustainability of the dividend.

See our latest analysis for Mitsui Fudosan

Mitsui Fudosan 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 ¥7.33 in 2015, and the most recent fiscal year payment was ¥33.00. This works out to be a compound annual growth rate (CAGR) of approximately 16% a year 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 Has Growth Potential

Investors could be attracted to the stock based on the quality of its payment history. It's encouraging to see that Mitsui Fudosan has been growing its earnings per share at 7.4% a year over the past five years. Mitsui Fudosan definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

We Really Like Mitsui Fudosan's Dividend

Overall, a dividend increase is always good, and we think that Mitsui Fudosan is a strong income stock thanks to its track record and growing earnings. 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. However, there are other things to consider for investors when analysing stock performance. Just as an example, we've come across 2 warning signs for Mitsui Fudosan you should be aware of, and 1 of them makes us a bit uncomfortable. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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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.