Nishi-Nippon Financial Holdings' (TSE:7189) Dividend Will Be ¥30.00

Nishi-Nippon Financial Holdings, Inc.'s (TSE:7189) investors are due to receive a payment of ¥30.00 per share on 9th of December. The payment will take the dividend yield to 3.1%, which is in line with the average for the industry.

View our latest analysis for Nishi-Nippon Financial Holdings

Nishi-Nippon Financial Holdings' Earnings Will Easily Cover The Distributions

While it is always good to see a solid dividend yield, we should also consider whether the payment is feasible.

Nishi-Nippon Financial Holdings has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. Taking data from its last earnings report, calculating for the company's payout ratio shows 37%, which means that Nishi-Nippon Financial Holdings would be able to pay its last dividend without pressure on the balance sheet.

Over the next year, EPS is forecast to expand by 18.1%. If the dividend continues on this path, the future payout ratio could be 32% by next year, which we think can be pretty sustainable going forward.

Dividend Volatility

The company's dividend history has been marked by instability, with at least one cut in the last 10 years. The annual payment during the last 10 years was ¥25.00 in 2014, and the most recent fiscal year payment was ¥60.00. This means that it has been growing its distributions at 9.1% per annum over that time. It's good to see the dividend growing at a decent rate, but the dividend has been cut at least once in the past. Nishi-Nippon Financial Holdings might have put its house in order since then, but we remain cautious.

The Dividend's Growth Prospects Are Limited

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. However, Nishi-Nippon Financial Holdings has only grown its earnings per share at 2.5% per annum over the past five years. While EPS growth is quite low, Nishi-Nippon Financial Holdings has the option to increase the payout ratio to return more cash to shareholders.

Our Thoughts On Nishi-Nippon Financial Holdings' Dividend

In summary, it's great to see that the company can raise the dividend and keep it in a sustainable range. The payout ratio looks good, but unfortunately the company's dividend track record isn't stellar. This looks like it could be a good dividend stock going forward, but we would note that the payout ratio has been at higher levels in the past so it could happen again.

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. For example, we've picked out 1 warning sign for Nishi-Nippon Financial Holdings that investors should know about before committing capital to this stock. Is Nishi-Nippon Financial Holdings not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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