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

Daishi Hokuetsu Financial Group, Inc.'s (TSE:7327) investors are due to receive a payment of ¥70.00 per share on 3rd of June. This makes the dividend yield about the same as the industry average at 2.8%.

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 established itself as a dividend paying company, given its 5-year history of distributing earnings to shareholders. Past distributions do not necessarily guarantee future ones, but Daishi Hokuetsu Financial Group's payout ratio of 26% is a good sign for current shareholders as this means that earnings decently cover dividends.

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

Daishi Hokuetsu Financial Group's dividend has been pretty stable for a little while now, but we will continue to be cautious until it has been demonstrated for a few more years. Since 2019, the annual payment back then was ¥120.00, compared to the most recent full-year payment of ¥130.00. This means that it has been growing its distributions at 1.6% per annum over that time. Daishi Hokuetsu Financial Group hasn't been paying a dividend for very long, so we wouldn't get to excited about its record of growth just yet.

The Dividend Has Limited Growth Potential

The company's investors will be pleased to have been receiving dividend income for some time. However, initial appearances might be deceiving. Earnings per share has been sinking by 19% over the last five years. A sharp decline in earnings per share is not great from from a dividend perspective. Even conservative payout ratios can come under pressure if earnings fall far enough.

Our Thoughts On Daishi Hokuetsu Financial Group's Dividend

In summary, while it's always good to see the dividend being raised, we don't think Daishi Hokuetsu Financial Group's payments are rock solid. 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. Overall, we don't think this company has the makings of a good income stock.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For example, we've identified 2 warning signs for Daishi Hokuetsu Financial Group (1 is a bit concerning!) that you should be aware of before investing. 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.