Mabuchi Motor (TSE:6592) Has Announced A Dividend Of ¥39.00
Mabuchi Motor Co., Ltd. (TSE:6592) has announced that it will pay a dividend of ¥39.00 per share on the 31st of March. This will take the annual payment to 2.8% of the stock price, which is above what most companies in the industry pay.
Mabuchi Motor's Projected Earnings Seem Likely To Cover Future Distributions
Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. Based on the last payment, Mabuchi Motor was quite comfortably earning enough to cover the dividend. This indicates that a lot of the earnings are being reinvested into the business, with the aim of fueling growth.
Looking forward, earnings per share is forecast to rise by 2.4% over the next year. Assuming the dividend continues along recent trends, we think the payout ratio could be 54% by next year, which is in a pretty sustainable range.
See our latest analysis for Mabuchi Motor
Dividend Volatility
While the company has been paying a dividend for a long time, it has cut the dividend at least once in the last 10 years. Since 2015, the dividend has gone from ¥49.50 total annually to ¥78.00. This implies that the company grew its distributions at a yearly rate of about 4.7% over that duration. It's encouraging to see some dividend growth, but the dividend has been cut at least once, and the size of the cut would eliminate most of the growth anyway, which makes this less attractive as an income investment.
The Dividend Looks Likely To Grow
With a relatively unstable dividend, it's even more important to see if earnings per share is growing. Mabuchi Motor has impressed us by growing EPS at 22% per year over the past five years. Mabuchi Motor is clearly able to grow rapidly while still returning cash to shareholders, positioning it to become a strong dividend payer in the future.
We Really Like Mabuchi Motor's Dividend
Overall, a dividend increase is always good, and we think that Mabuchi Motor 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.
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. For instance, we've picked out 2 warning signs for Mabuchi Motor that investors should take into consideration. Is Mabuchi Motor not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.
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