Nissin Foods' (HKG:1475) Shareholders Will Receive A Bigger Dividend Than Last Year

Nissin Foods Company Limited (HKG:1475) has announced that it will be increasing its dividend from last year's comparable payment on the 27th of June to HK$0.1582. Despite this raise, the dividend yield of 3.2% is only a modest boost to shareholder returns.

View our latest analysis for Nissin Foods

Nissin Foods' Payment Has Solid Earnings Coverage

Even a low dividend yield can be attractive if it is sustained for years on end. Prior to this announcement, Nissin Foods' dividend was comfortably covered by both cash flow and earnings. This indicates that quite a large proportion of earnings is being invested back into the business.

The next year is set to see EPS grow by 26.0%. If the dividend continues on this path, the payout ratio could be 45% by next year, which we think can be pretty sustainable going forward.

Nissin Foods Doesn't Have A Long Payment History

Nissin Foods' dividend has been pretty stable for a little while now, but we will continue to be cautious until it has been demonstrated for a few more years. Since 2018, the annual payment back then was HK$0.073, compared to the most recent full-year payment of HK$0.1582. This works out to be a compound annual growth rate (CAGR) of approximately 14% a year over that time. We're not overly excited about the relatively short history of dividend payments, however the dividend is growing at a nice rate and we might take a closer look.

The Dividend Looks Likely To Grow

The company's investors will be pleased to have been receiving dividend income for some time. Nissin Foods has seen EPS rising for the last five years, at 11% per annum. The company is paying a reasonable amount of earnings to shareholders, and is growing earnings at a decent rate so we think it could be a decent dividend stock.

Nissin Foods Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that Nissin Foods is a strong income stock thanks to its track record and growing earnings. Earnings are easily covering distributions, and the company is generating plenty of cash. All of these factors considered, we think this has solid potential as a dividend stock.

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. Earnings growth generally bodes well for the future value of company dividend payments. See if the 4 Nissin Foods analysts we track are forecasting continued growth with our free report on analyst estimates for the company. 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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