Nihon Tokushu Toryo (TSE:4619) Is Increasing Its Dividend To ¥38.00

Nihon Tokushu Toryo Co., Ltd. (TSE:4619) has announced that it will be increasing its dividend from last year's comparable payment on the 24th of June to ¥38.00. This will take the dividend yield to an attractive 4.3%, providing a nice boost to shareholder returns.

See our latest analysis for Nihon Tokushu Toryo

Nihon Tokushu Toryo's Payment Could Potentially Have Solid Earnings Coverage

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. Before making this announcement, Nihon Tokushu Toryo was easily earning enough to cover the dividend. This means that most of its earnings are being retained to grow the business.

Looking forward, earnings per share could rise by 11.2% over the next year if the trend from the last few years continues. If the dividend continues on this path, the payout ratio could be 31% by next year, which we think can be pretty sustainable going forward.

Nihon Tokushu Toryo Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. The dividend has gone from an annual total of ¥10.00 in 2015 to the most recent total annual payment of ¥60.00. This means that it has been growing its distributions at 20% per annum over that time. We can see that payments have shown some very nice upward momentum without faltering, which provides some reassurance that future payments will also be reliable.

The Dividend Looks Likely To Grow

The company's investors will be pleased to have been receiving dividend income for some time. Nihon Tokushu Toryo has seen EPS rising for the last five years, at 11% per annum. Nihon Tokushu Toryo definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

Nihon Tokushu Toryo Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that Nihon Tokushu Toryo 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. All in all, this checks a lot of the boxes we look for when choosing an income stock.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. However, there are other things to consider for investors when analysing stock performance. Are management backing themselves to deliver performance? Check their shareholdings in Nihon Tokushu Toryo in our latest insider ownership analysis. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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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.