Daishi Hokuetsu Financial Group (TSE:7327) Will Pay A Larger Dividend Than Last Year At ¥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. This makes the dividend yield about the same as the industry average at 3.2%.

Check out our latest analysis for Daishi Hokuetsu Financial Group

Daishi Hokuetsu Financial Group's Earnings Will Easily Cover The Distributions

While it is always good to see a solid dividend yield, we should also consider whether the payment is feasible.

Daishi Hokuetsu Financial Group has established itself as a dividend paying company, given its 5-year history of distributing earnings to shareholders. Taking data from its last earnings report, calculating for the company's payout ratio of 26%shows that Daishi Hokuetsu Financial Group would be able to pay its last dividend without pressure on the balance sheet.

Unless the company can turn things around, EPS could fall by 19.4% over the next year. If the dividend continues along recent trends, we estimate the future payout ratio could be 41%, which we consider to be quite comfortable, with most of the company's earnings left over to grow the business in the future.

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 ¥160.00. This works out to be a compound annual growth rate (CAGR) of approximately 5.9% a year over that time. Investors will likely want to see a longer track record of growth before making decision to add this to their income portfolio.

Dividend Growth Potential Is Shaky

The company's investors will be pleased to have been receiving dividend income for some time. However, things aren't all that rosy. Earnings per share has been sinking by 19% over the last five years. Dividend payments are likely to come under some pressure unless EPS can pull out of the nosedive it is in.

In Summary

Overall, this is probably not a great income stock, even though the dividend is being raised at the moment. 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 be a touch cautious of relying on this stock primarily for the dividend income.

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 significant!) 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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