Mizuno (TSE:8022) Is Paying Out A Dividend Of ¥25.00
Mizuno Corporation (TSE:8022) will pay a dividend of ¥25.00 on December 2, yielding 1.9%. Despite a stable dividend history, concerns arise as the payout ratio is high, with dividends at 133% of cash flows. Future earnings are expected to rise by 7.2%, potentially lowering the payout ratio to 64%. While Mizuno has shown consistent dividend growth, the lack of reinvestment raises sustainability questions. Overall, it may not be a strong dividend stock, prompting investors to consider alternatives.
Mizuno Corporation (TSE:8022) will pay a dividend of ¥25.00 on the 2nd of December. Based on this payment, the dividend yield will be 1.9%, which is fairly typical for the industry.
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Mizuno's Projected Earnings Seem Likely To Cover Future Distributions
Unless the payments are sustainable, the dividend yield doesn't mean too much. Before making this announcement, Mizuno was paying out quite a large proportion of both earnings and cash flow, with the dividend being 133% of cash flows. Paying out such a high proportion of cash flows can expose the business to needing to cut the dividend if the business runs into some challenges.
Looking forward, earnings per share is forecast to rise by 7.2% over the next year. Under the assumption that the dividend will continue along recent trends, we think the payout ratio could be 64% which would be quite comfortable going to take the dividend forward.
See our latest analysis for Mizuno
Mizuno Has A Solid Track Record
Even over a long history of paying dividends, the company's distributions have been remarkably stable. Since 2015, the annual payment back then was ¥16.67, compared to the most recent full-year payment of ¥50.00. This implies that the company grew its distributions at a yearly rate of about 12% over that duration. Rapidly growing dividends for a long time is a very valuable feature for an income stock.
Mizuno's Dividend Might Lack Growth
The company's investors will be pleased to have been receiving dividend income for some time. We are encouraged to see that Mizuno has grown earnings per share at 46% 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 Mizuno hasn't been doing.
Our Thoughts On Mizuno's Dividend
Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. Although they have been consistent in the past, we think the payments are a little high to be sustained. We would probably look elsewhere for an income investment.
Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. However, there are other things to consider for investors when analysing stock performance. Taking the debate a bit further, we've identified 1 warning sign for Mizuno that investors need to be conscious of moving forward. Is Mizuno not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.
