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

The board of Nishi-Nippon Financial Holdings, Inc. (TSE:7189) has announced that it will pay a dividend on the 9th of December, with investors receiving ¥30.00 per share. This takes the annual payment to 3.7% of the current stock price, which is about average for the industry.

View our latest analysis for Nishi-Nippon Financial Holdings

Nishi-Nippon Financial Holdings' Dividend Forecasted To Be Well Covered By Earnings

Unless the payments are sustainable, the dividend yield doesn't mean too much.

Having distributed dividends for at least 10 years, Nishi-Nippon Financial Holdings has a long history of paying out a part of its earnings to shareholders. Based on Nishi-Nippon Financial Holdings' last earnings report, the payout ratio is at a decent 31%, meaning that the company is able to pay out its dividend with a bit of room to spare.

Looking forward, earnings per share is forecast to rise by 17.8% over the next year. Assuming the dividend continues along recent trends, we think the future payout ratio could be 30% by next year, which is in a pretty sustainable range.

Dividend Volatility

The company has a long dividend track record, but it doesn't look great with cuts in the past. Since 2014, the dividend has gone from ¥25.00 total annually to ¥60.00. This implies that the company grew its distributions at a yearly rate of about 9.1% over that duration. 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.

Nishi-Nippon Financial Holdings Could Grow Its Dividend

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. Nishi-Nippon Financial Holdings has seen EPS rising for the last five years, at 6.5% per annum. With a decent amount of growth and a low payout ratio, we think this bodes well for Nishi-Nippon Financial Holdings' prospects of growing its dividend payments in the future.

Our Thoughts On Nishi-Nippon Financial Holdings' Dividend

Overall, it's great to see the dividend being raised and that it is still in a sustainable range. The dividend has been at reasonable levels historically, but that hasn't translated into a consistent payment. 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. However, there are other things to consider for investors when analysing stock performance. For instance, we've picked out 2 warning signs for Nishi-Nippon Financial Holdings that investors should take into consideration. 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.