Daishi Hokuetsu Financial Group (TSE:7327) Is Increasing Its Dividend To ¥80.00

The board of Daishi Hokuetsu Financial Group, Inc. (TSE:7327) has announced that it will be paying its dividend of ¥80.00 on the 2nd of December, an increased payment from last year's comparable dividend. Based on this payment, the dividend yield for the company will be 3.2%, 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

Solid dividend yields are great, but they only really help us if the payment is sustainable.

Having paid out dividends for 5 years, Daishi Hokuetsu Financial Group has a good history of paying out a part of its earnings to shareholders. 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.

EPS is set to fall by 19.4% over the next 12 months if recent trends continue. Assuming the dividend continues along recent trends, we believe the future payout ratio could be 41%, which we are pretty comfortable with and we think is feasible on an earnings basis.

Daishi Hokuetsu Financial Group 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 dividend has gone from ¥120.00 total annually to ¥160.00. This means that it has been growing its distributions at 5.9% per annum over that time. Daishi Hokuetsu Financial Group has been growing its dividend at a decent rate, and the payments have been stable. However, the payment history is very short, so there is no evidence yet that the dividend can be sustained over a full economic cycle.

The Dividend Has Limited Growth Potential

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. However, things aren't all that rosy. Earnings per share has been sinking by 19% over the last five years. Such rapid declines definitely have the potential to constrain dividend payments if the trend continues into the future.

Our Thoughts On Daishi Hokuetsu Financial Group's Dividend

Overall, this is probably not a great income stock, even though the dividend is being raised at the moment. The company hasn't been paying a very consistent dividend over time, despite only paying out a small portion of earnings. This company is not in the top tier of income providing stocks.

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. For example, we've identified 2 warning signs for Daishi Hokuetsu Financial Group (1 is a bit unpleasant!) that you should be aware of before investing. Is Daishi Hokuetsu Financial Group not quite the opportunity you were looking for? Why not check out our selection of top 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.

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