Daishi Hokuetsu Financial Group (TSE:7327) Has Announced A Dividend Of ¥70.00

Daishi Hokuetsu Financial Group, Inc. (TSE:7327) has announced that it will pay a dividend of ¥70.00 per share on the 3rd of June. Based on this payment, the dividend yield for the company will be 3.1%, which is fairly typical for the industry.

See our latest analysis for Daishi Hokuetsu Financial Group

Daishi Hokuetsu Financial Group's Payment Expected To Have Solid Earnings Coverage

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

Daishi Hokuetsu Financial Group has a good history of paying out dividends, with its current track record at 5 years. Based on Daishi Hokuetsu Financial Group's last earnings report, the payout ratio is at a decent 26%, meaning that the company is able to pay out its dividend with a bit of room to spare.

Looking forward, EPS could fall by 19.3% if the company can't turn things around from the last few years. Assuming the dividend continues along recent trends, we believe the future payout ratio could be 37%, which we are pretty comfortable with and we think is feasible on an earnings basis.

Daishi Hokuetsu Financial Group Is Still Building Its Track Record

The dividend's track record has been pretty solid, but with only 5 years of history we want to see a few more years of history before making any solid conclusions. Since 2019, the dividend has gone from ¥120.00 total annually to ¥130.00. This means that it has been growing its distributions at 1.6% per annum over that time. 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.

The Dividend Has Limited Growth Potential

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Unfortunately things aren't as good as they seem. Earnings per share has been sinking by 19% over the last five years. This steep decline can indicate that the business is going through a tough time, which could constrain its ability to pay a larger dividend each year in the future.

Our Thoughts On Daishi Hokuetsu Financial Group's Dividend

Overall, we always like to see the dividend being raised, but we don't think Daishi Hokuetsu Financial Group will make a great income stock. The low payout ratio is a redeeming feature, but generally we are not too happy with the payments Daishi Hokuetsu Financial Group has been making. We would probably look elsewhere for an income investment.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For example, we've identified 2 warning signs for Daishi Hokuetsu Financial Group (1 is concerning!) that you should be aware of before investing. 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.