First Bank Of Toyama (TSE:7184) Will Pay A Dividend Of ¥15.00

The board of The First Bank Of Toyama, Ltd. (TSE:7184) has announced that it will pay a dividend on the 24th of June, with investors receiving ¥15.00 per share. This makes the dividend yield about the same as the industry average at 2.5%.

View our latest analysis for First Bank Of Toyama

First Bank Of Toyama's Earnings Will Easily Cover The Distributions

We like a dividend to be consistent over the long term, so checking whether it is sustainable is important.

Having paid out dividends for 9 years, First Bank Of Toyama has a good history of paying out a part of its earnings to shareholders. Using data from its latest earnings report, First Bank Of Toyama's payout ratio sits at 12%, an extremely comfortable number that shows that it can pay its dividend.

Looking forward, earnings per share could rise by 42.4% over the next year if the trend from the last few years continues. If the dividend continues along recent trends, we estimate the future payout ratio will be 11%, which is in the range that makes us comfortable with the sustainability of the dividend.

First Bank Of Toyama's Dividend Has Lacked Consistency

Even in its relatively short history, the company has reduced the dividend at least once. Due to this, we are a little bit cautious about the dividend consistency over a full economic cycle. Since 2015, the dividend has gone from ¥14.00 total annually to ¥27.00. This means that it has been growing its distributions at 7.6% per annum over that time. We have seen cuts in the past, so while the growth looks promising we would be a little bit cautious about its track record.

The Dividend Looks Likely To Grow

Given that the dividend has been cut in the past, we need to check if earnings are growing and if that might lead to stronger dividends in the future. First Bank Of Toyama has impressed us by growing EPS at 42% per year over the past five years. Rapid earnings growth and a low payout ratio suggest this company has been effectively reinvesting in its business. Should that continue, this company could have a bright future.

First Bank Of Toyama Looks Like A Great Dividend Stock

Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. 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.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Taking the debate a bit further, we've identified 2 warning signs for First Bank Of Toyama that investors need to be conscious of moving forward. 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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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.