Mitsubishi Kakoki Kaisha (TSE:6331) Will Pay A Dividend Of ¥46.00

The board of Mitsubishi Kakoki Kaisha, Ltd. (TSE:6331) has announced that it will pay a dividend on the 30th of June, with investors receiving ¥46.00 per share. The dividend yield will be in the average range for the industry at 2.6%.

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Mitsubishi Kakoki Kaisha's Future Dividend Projections Appear Well Covered By Earnings

Solid dividend yields are great, but they only really help us if the payment is sustainable. Prior to this announcement, Mitsubishi Kakoki Kaisha's dividend was making up a very large proportion of earnings, and the company was also not generating any cash flow to offset this. Generally, we think that this would be a risky long term practice.

Over the next year, EPS is forecast to expand by 13.7%. If the dividend continues on this path, the payout ratio could be 35% by next year, which we think can be pretty sustainable going forward.

View our latest analysis for Mitsubishi Kakoki Kaisha

Mitsubishi Kakoki Kaisha Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. The dividend has gone from an annual total of ¥16.67 in 2015 to the most recent total annual payment of ¥86.00. This means that it has been growing its distributions at 18% per annum over that time. It is good to see that there has been strong dividend growth, and that there haven't been any cuts for a long time.

The Dividend Looks Likely To Grow

Investors could be attracted to the stock based on the quality of its payment history. Mitsubishi Kakoki Kaisha has impressed us by growing EPS at 21% per year over the past five years. Fast growing earnings are great, but this can rarely be sustained without some reinvestment into the business, which Mitsubishi Kakoki Kaisha hasn't been doing.

In Summary

In summary, dividends being cut isn't ideal, however it can bring the payment into a more sustainable range. While the low payout ratio is a redeeming feature, this is offset by the minimal cash to cover the payments. We would be a touch cautious of relying on this stock primarily for the dividend income.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Case in point: We've spotted 3 warning signs for Mitsubishi Kakoki Kaisha (of which 1 makes us a bit uncomfortable!) you should know about. 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.