Nishi-Nippon Financial Holdings (TSE:7189) Has Announced A Dividend Of ¥45.00

The board of Nishi-Nippon Financial Holdings, Inc. (TSE:7189) has announced that it will pay a dividend on the 10th of December, with investors receiving ¥45.00 per share. This makes the dividend yield 4.0%, which is above the industry average.

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

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained.

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. Taking data from its last earnings report, calculating for the company's payout ratio shows 31%, 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 14.2%. If the dividend continues along recent trends, we estimate the future payout ratio will be 38%, which is in the range that makes us comfortable with the sustainability of the dividend.

See our latest analysis for Nishi-Nippon Financial Holdings

Dividend Volatility

While the company has been paying a dividend for a long time, it has cut the dividend at least once in the last 10 years. Since 2015, the dividend has gone from ¥25.00 total annually to ¥90.00. This works out to be a compound annual growth rate (CAGR) of approximately 14% a year over that time. Nishi-Nippon Financial Holdings has grown distributions at a rapid rate despite cutting the dividend at least once in the past. Companies that cut once often cut again, so we would be cautious about buying this stock solely for the dividend income.

The Dividend Looks Likely To Grow

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 11% 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.

We Really Like Nishi-Nippon Financial Holdings' Dividend

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. Earnings are easily covering distributions, and the company is generating plenty of cash. All in all, this checks a lot of the boxes we look for when choosing an income stock.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. 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. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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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.