MITSUI-SOKO HOLDINGS (TSE:9302) Is Due To Pay A Dividend Of ¥75.00

The board of MITSUI-SOKO HOLDINGS Co., Ltd. (TSE:9302) has announced that it will pay a dividend of ¥75.00 per share on the 5th of June. The dividend yield will be in the average range for the industry at 3.1%.

Check out our latest analysis for MITSUI-SOKO HOLDINGS

MITSUI-SOKO HOLDINGS' Dividend Is Well Covered By Earnings

While it is always good to see a solid dividend yield, we should also consider whether the payment is feasible. However, MITSUI-SOKO HOLDINGS' earnings easily cover the dividend. This means that most of what the business earns is being used to help it grow.

Over the next year, EPS is forecast to fall by 10.1%. Assuming the dividend continues along recent trends, we believe the payout ratio could be 37%, which we are pretty comfortable with and we think is feasible on an earnings basis.

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 ¥45.00 total annually to ¥142.00. This means that it has been growing its distributions at 12% per annum over that time. MITSUI-SOKO HOLDINGS has grown distributions at a rapid rate despite cutting the dividend at least once in the past. Companies that cut once often cut again, so we would be cautious about buying this stock solely for the dividend income.

The Dividend Looks Likely To Grow

Given that the dividend has been cut in the past, we need to check if earnings are growing and if that might lead to stronger dividends in the future. MITSUI-SOKO HOLDINGS has seen EPS rising for the last five years, at 19% per annum. With a decent amount of growth and a low payout ratio, we think this bodes well for MITSUI-SOKO HOLDINGS' prospects of growing its dividend payments in the future.

We Really Like MITSUI-SOKO HOLDINGS' Dividend

It is generally not great to see the dividend being cut, but we don't think this should happen much if at all in the future given that MITSUI-SOKO HOLDINGS has the makings of a solid income stock moving forward. By reducing the dividend, pressure will be taken off the balance sheet, which could help the dividend to be consistent in the future. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For example, we've identified 3 warning signs for MITSUI-SOKO HOLDINGS (1 is a bit concerning!) 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.