Nihon Tokushu Toryo's (TSE:4619) Shareholders Will Receive A Bigger Dividend Than Last Year

The board of Nihon Tokushu Toryo Co., Ltd. (TSE:4619) has announced that it will be paying its dividend of ¥25.00 on the 24th of June, an increased payment from last year's comparable dividend. This makes the dividend yield 3.4%, which is above the industry average.

Check out our latest analysis for Nihon Tokushu Toryo

Nihon Tokushu Toryo's Earnings Easily Cover The Distributions

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. Before making this announcement, Nihon Tokushu Toryo was easily earning enough to cover the dividend. As a result, a large proportion of what it earned was being reinvested back into the business.

Looking forward, earnings per share could rise by 6.2% 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 25% by next year, which we think can be pretty sustainable going forward.

Nihon Tokushu Toryo Has A Solid Track Record

The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. Since 2014, the dividend has gone from ¥10.00 total annually to ¥46.00. This works out to be a compound annual growth rate (CAGR) of approximately 16% a year over that time. Rapidly growing dividends for a long time is a very valuable feature for an income stock.

Nihon Tokushu Toryo Could Grow Its Dividend

The company's investors will be pleased to have been receiving dividend income for some time. Nihon Tokushu Toryo has impressed us by growing EPS at 6.2% per 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.

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 of these factors considered, we think this has solid potential as a dividend stock.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic 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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