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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About TSE:7381
Hokkoku Financial Holdings
Operates as a holding company for The Hokkoku Bank,Ltd.
Proven track record with mediocre balance sheet.