Nishi-Nippon Financial Holdings (TSE:7189) Has Announced That It Will Be Increasing Its Dividend To ¥35.00

Nishi-Nippon Financial Holdings, Inc.'s (TSE:7189) dividend will be increasing from last year's payment of the same period to ¥35.00 on 30th of June. This takes the annual payment to 3.4% of the current stock price, which is about average for the industry.

Check out our latest analysis for Nishi-Nippon Financial Holdings

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

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

Nishi-Nippon Financial Holdings has a long history of paying out dividends, with its current track record at a minimum of 10 years. Based on Nishi-Nippon Financial Holdings' last earnings report, the payout ratio is at a decent 34%, meaning that the company is able to pay out its dividend with a bit of room to spare.

Over the next year, EPS is forecast to expand by 16.7%. If the dividend continues along recent trends, we estimate the future payout ratio will be 34%, which is in the range that makes us comfortable with the sustainability of the dividend.

Dividend Volatility

The company has a long dividend track record, but it doesn't look great with cuts in the past. The annual payment during the last 10 years was ¥25.00 in 2015, and the most recent fiscal year payment was ¥65.00. This implies that the company grew its distributions at a yearly rate of about 10% over that duration. It is great to see strong growth in the dividend payments, but cuts are concerning as it may indicate the payout policy is too ambitious.

The Dividend's Growth Prospects Are Limited

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. Earnings have grown at around 4.7% a year for the past five years, which isn't massive but still better than seeing them shrink. While growth may be thin on the ground, Nishi-Nippon Financial Holdings could always pay out a higher proportion of earnings to increase shareholder returns.

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 payout ratio looks good, but unfortunately the company's dividend track record isn't stellar. Taking all of this into consideration, the dividend looks viable moving forward, but investors should be mindful that the company has pushed the boundaries of sustainability in the past and may do so again.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. As an example, we've identified 1 warning sign for Nishi-Nippon Financial Holdings that you should be aware of before investing. 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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