Nihon Tokushu Toryo's (TSE:4619) Dividend Will Be ¥22.00

Nihon Tokushu Toryo Co., Ltd.'s (TSE:4619) investors are due to receive a payment of ¥22.00 per share on 2nd of December. This takes the dividend yield to 4.0%, which shareholders will be pleased with.

View our latest analysis for Nihon Tokushu Toryo

Nihon Tokushu Toryo's Payment Has Solid Earnings Coverage

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. However, prior to this announcement, Nihon Tokushu Toryo's dividend was comfortably covered by both cash flow and earnings. This means that most of what the business earns is being used to help it grow.

If the trend of the last few years continues, EPS will grow by 7.5% over the next 12 months. If the dividend continues on this path, the payout ratio could be 27% by next year, which we think can be pretty sustainable going forward.

Nihon Tokushu Toryo Has A Solid Track Record

The company has an extended history of paying stable dividends. The annual payment during the last 10 years was ¥10.00 in 2014, and the most recent fiscal year payment was ¥48.00. This works out to be a compound annual growth rate (CAGR) of approximately 17% a year over that time. Rapidly growing dividends for a long time is a very valuable feature for an income stock.

The Dividend Has Growth Potential

The company's investors will be pleased to have been receiving dividend income for some time. It's encouraging to see that Nihon Tokushu Toryo has been growing its earnings per share at 7.5% a year over the past five years. A low payout ratio and decent growth suggests that the company is reinvesting well, and it also has plenty of room to increase the dividend over time.

We Really Like Nihon Tokushu Toryo's Dividend

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. 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. See if management have their own wealth at stake, by checking insider shareholdings in Nihon Tokushu Toryo stock. Is Nihon Tokushu Toryo not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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