Daishi Hokuetsu Financial Group's (TSE:7327) Shareholders Will Receive A Bigger Dividend Than Last Year

The board of Daishi Hokuetsu Financial Group, Inc. (TSE:7327) has announced that it will be paying its dividend of ¥90.00 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 3.7%.

Check out our latest analysis for Daishi Hokuetsu Financial Group

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

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 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 28%, meaning that the company is able to pay out its dividend with a bit of room to spare.

EPS is set to fall by 19.5% over the next 12 months if recent trends continue. If the dividend continues along recent trends, we estimate the future payout ratio could be 44%, 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 Doesn't Have A Long Payment History

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. The annual payment during the last 5 years was ¥120.00 in 2019, and the most recent fiscal year payment was ¥180.00. This means that it has been growing its distributions at 8.4% 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. Unfortunately things aren't as good as they seem. Daishi Hokuetsu Financial Group's earnings per share has shrunk at 19% a year over the past 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, this is probably not a great income stock, even though the dividend is being raised at the moment. While Daishi Hokuetsu Financial Group is earning enough to cover the dividend, we are generally unimpressed with its future prospects. We don't think Daishi Hokuetsu Financial Group is a great stock to add to your portfolio if income is your focus.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For instance, we've picked out 2 warning signs for Daishi Hokuetsu Financial Group that investors should take into consideration. 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.