Hokkoku Financial Holdings' (TSE:7381) Dividend Will Be Increased To ¥60.00

Hokkoku Financial Holdings, Inc. (TSE:7381) has announced that it will be increasing its periodic dividend on the 5th of December to ¥60.00, which will be 9.1% higher than last year's comparable payment amount of ¥55.00. Even though the dividend went up, the yield is still quite low at only 2.3%.

See our latest analysis for Hokkoku Financial Holdings

Hokkoku Financial Holdings' Payment Expected To Have Solid Earnings Coverage

The dividend yield is a little bit low, but sustainability of the payments is also an important part of evaluating an income stock.

Having distributed dividends for at least 10 years, Hokkoku Financial Holdings has a long history of paying out a part of its earnings to shareholders. Taking data from its last earnings report, calculating for the company's payout ratio shows 53%, which means that Hokkoku Financial Holdings would be able to pay its last dividend without pressure on the balance sheet.

EPS is set to fall by 7.0% over the next 12 months if recent trends continue. If the dividend continues along the path it has been on recently, we estimate the future payout ratio could be 63%, which is definitely feasible to continue.

Dividend Volatility

The company has a long dividend track record, but it doesn't look great with cuts in the past. The annual payment during the last 10 years was ¥60.00 in 2014, and the most recent fiscal year payment was ¥110.00. This means that it has been growing its distributions at 6.2% per annum over that time. A reasonable rate of dividend growth is good to see, but we're wary that the dividend history is not as solid as we'd like, having been cut at least once.

Dividend Growth Is Doubtful

With a relatively unstable dividend, it's even more important to evaluate if earnings per share is growing, which could point to a growing dividend in the future. It's not great to see that Hokkoku Financial Holdings' earnings per share has fallen at approximately 7.0% per year over the past five years. If the company is making less over time, it naturally follows that it will also have to pay out less in dividends.

Our Thoughts On Hokkoku Financial Holdings' Dividend

In summary, while it's always good to see the dividend being raised, we don't think Hokkoku Financial Holdings' payments are rock solid. The low payout ratio is a redeeming feature, but generally we are not too happy with the payments Hokkoku Financial Holdings has been making. This company is not in the top tier of income providing stocks.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. However, there are other things to consider for investors when analysing stock performance. Case in point: We've spotted 2 warning signs for Hokkoku Financial Holdings (of which 1 makes us a bit uncomfortable!) you should know about. 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.