Kyushu Financial Group (TSE:7180) Will Pay A Larger Dividend Than Last Year At ¥11.00

The board of Kyushu Financial Group, Inc. (TSE:7180) has announced that it will be paying its dividend of ¥11.00 on the 3rd of June, an increased payment from last year's comparable dividend. The payment will take the dividend yield to 3.2%, which is in line with the average for the industry.

See our latest analysis for Kyushu Financial Group

Kyushu Financial Group's Earnings Will Easily Cover The Distributions

We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue.

Kyushu Financial Group has a good history of paying out dividends, with its current track record at 9 years. Past distributions do not necessarily guarantee future ones, but Kyushu Financial Group's payout ratio of 32% is a good sign for current shareholders as this means that earnings decently cover dividends.

The next year is set to see EPS grow by 18.2%. Assuming the dividend continues along recent trends, we think the future payout ratio could be 32% by next year, which is in a pretty sustainable range.

Kyushu Financial Group Doesn't Have A Long Payment History

The dividend's track record has been pretty solid, but with only 9 years of history we want to see a few more years of history before making any solid conclusions. The annual payment during the last 9 years was ¥5.00 in 2016, and the most recent fiscal year payment was ¥22.00. This implies that the company grew its distributions at a yearly rate of about 18% over that duration. It is always nice to see strong dividend growth, but with such a short payment history we wouldn't be inclined to rely on it until a longer track record can be developed.

Dividend Growth May Be Hard To Achieve

Investors could be attracted to the stock based on the quality of its payment history. However, Kyushu Financial Group has only grown its earnings per share at 3.8% per annum over the past five years. While EPS growth is quite low, Kyushu Financial Group has the option to increase the payout ratio to return more cash to shareholders.

In Summary

In summary, it's great to see that the company can raise the dividend and keep it in a sustainable range. The dividend has been at reasonable levels historically, but that hasn't translated into a consistent payment. The payment isn't stellar, but it could make a decent addition to a dividend portfolio.

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

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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.