San ju San Financial GroupInc's (TSE:7322) Upcoming Dividend Will Be Larger Than Last Year's

San ju San Financial Group,Inc. (TSE:7322) has announced that it will be increasing its dividend from last year's comparable payment on the 24th of June to ¥57.00. This will take the dividend yield to an attractive 3.8%, providing a nice boost to shareholder returns.

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San ju San Financial GroupInc's Payment Expected To Have Solid Earnings Coverage

A big dividend yield for a few years doesn't mean much if it can't be sustained.

Having paid out dividends for 6 years, San ju San Financial GroupInc has a good history of paying out a part of its earnings to shareholders. While past data isn't a guarantee for the future, San ju San Financial GroupInc's latest earnings report puts its payout ratio at 15%, showing that the company can pay out its dividends comfortably.

Over the next year, EPS could expand by 8.0% if recent trends continue. If the dividend continues along recent trends, we estimate the future payout ratio will be 30%, which is in the range that makes us comfortable with the sustainability of the dividend.

See our latest analysis for San ju San Financial GroupInc

San ju San Financial GroupInc Doesn't Have A Long Payment History

Even though the company has been paying a consistent dividend for a while, we would like to see a few more years before we feel comfortable relying on it. Since 2019, the annual payment back then was ¥72.00, compared to the most recent full-year payment of ¥94.00. This implies that the company grew its distributions at a yearly rate of about 4.5% over that duration. It's good to see at least some dividend growth. Yet with a relatively short dividend paying history, we wouldn't want to depend on this dividend too heavily.

San ju San Financial GroupInc Could Grow Its Dividend

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. It's encouraging to see that San ju San Financial GroupInc has been growing its earnings per share at 8.0% a year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for San ju San Financial GroupInc's prospects of growing its dividend payments in the future.

In Summary

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. 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.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. However, there are other things to consider for investors when analysing stock performance. Are management backing themselves to deliver performance? Check their shareholdings in San ju San Financial GroupInc in our latest insider ownership analysis. 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.