MIRARTH HOLDINGS,Inc. (TSE:8897) has announced that it will pay a dividend of ¥7.00 per share on the 4th of December. This will take the annual payment to 5.8% of the stock price, which is above what most companies in the industry pay.
Check out our latest analysis for MIRARTH HOLDINGSInc
MIRARTH HOLDINGSInc's Earnings Easily Cover The Distributions
A big dividend yield for a few years doesn't mean much if it can't be sustained. However, MIRARTH HOLDINGSInc's earnings easily cover the dividend. This means that most of its earnings are being retained to grow the business.
If the trend of the last few years continues, EPS will grow by 9.7% over the next 12 months. If the dividend continues on this path, the payout ratio could be 38% by next year, which we think can be pretty sustainable going forward.
Dividend Volatility
The company's dividend history has been marked by instability, with at least one cut in the last 10 years. Since 2014, the dividend has gone from ¥4.50 total annually to ¥30.00. This works out to be a compound annual growth rate (CAGR) of approximately 21% a year over that time. Despite the rapid growth in the dividend over the past number of years, we have seen the payments go down the past as well, so that makes us cautious.
The Dividend Has Growth Potential
With a relatively unstable dividend, it's even more important to evaluate if earnings per share is growing, which could point to a growing dividend in the future. We are encouraged to see that MIRARTH HOLDINGSInc has grown earnings per share at 9.7% per year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for MIRARTH HOLDINGSInc's prospects of growing its dividend payments in the future.
We should note that MIRARTH HOLDINGSInc has issued stock equal to 23% of shares outstanding. Trying to grow the dividend when issuing new shares reminds us of the ancient Greek tale of Sisyphus - perpetually pushing a boulder uphill. Companies that consistently issue new shares are often suboptimal from a dividend perspective.
MIRARTH HOLDINGSInc Looks Like A Great Dividend Stock
Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. 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.
Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. However, there are other things to consider for investors when analysing stock performance. To that end, MIRARTH HOLDINGSInc has 4 warning signs (and 2 which are potentially serious) we think you should know about. Is MIRARTH HOLDINGSInc 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.
About TSE:8897
Solid track record with excellent balance sheet and pays a dividend.
