Hokkoku Financial Holdings (TSE:7381) Is Increasing Its Dividend To ¥60.00

Hokkoku Financial Holdings, Inc.'s (TSE:7381) periodic dividend will be increasing on the 5th of December to ¥60.00, with investors receiving 9.1% more than last year's ¥55.00. The payment will take the dividend yield to 2.6%, which is in line with the average for the industry.

Check out our latest analysis for Hokkoku Financial Holdings

Hokkoku Financial Holdings' Dividend Forecasted To Be Well Covered By Earnings

Unless the payments are sustainable, the dividend yield doesn't mean too much.

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. Based on Hokkoku Financial Holdings' last earnings report, the payout ratio is at a decent 53%, meaning that the company is able to pay out its dividend with a bit of room to spare.

EPS is set to fall by 6.7% over the next 12 months if recent trends continue. If the dividend continues along recent trends, we estimate the future payout ratio could be 62%, which we consider to be quite comfortable, with most of the company's earnings left over to grow the business in the future.

Dividend Volatility

The company's dividend history has been marked by instability, with at least one cut in the last 10 years. Since 2014, the annual payment back then was ¥60.00, compared to the most recent full-year payment of ¥110.00. This implies that the company grew its distributions at a yearly rate of about 6.2% over that duration. We have seen cuts in the past, so while the growth looks promising we would be a little bit cautious about its track record.

Dividend Growth May Be Hard To Come By

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. Over the past five years, it looks as though Hokkoku Financial Holdings' EPS has declined at around 6.7% a year. A modest decline in earnings isn't great, and it makes it quite unlikely that the dividend will grow in the future unless that trend can be reversed.

Our Thoughts On Hokkoku Financial Holdings' Dividend

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 Hokkoku Financial Holdings has been making. Overall, we don't think this company has the makings of a good income stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For example, we've identified 2 warning signs for Hokkoku Financial Holdings (1 is significant!) that you should be aware of before investing. Is Hokkoku Financial Holdings 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.