Aichi Financial Group's (TSE:7389) Dividend Will Be ¥50.00

Aichi Financial Group, Inc. (TSE:7389) will pay a dividend of ¥50.00 on the 2nd of December. Based on this payment, the dividend yield will be 3.3%, which is fairly typical for the industry.

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Aichi Financial Group Will Pay Out More Than It Is Earning

Solid dividend yields are great, but they only really help us if the payment is sustainable.

Aichi Financial Group has a short history of paying out dividends, with its current track record at only 2 years. Taking data from Aichi Financial Group's last earnings report, the payout ratio is at a decent 62%, meaning that the company is able to pay out its dividend with some room to spare.

EPS is set to fall by 39.1% over the next 12 months if recent trends continue. Assuming the dividend continues along recent trends, we believe the future payout ratio could reach 111%, which could put the dividend under pressure if earnings don't start to improve.

Check out our latest analysis for Aichi Financial Group

Aichi Financial Group Is Still Building Its Track Record

The dividend hasn't seen any major cuts in the past, but the company has only been paying a dividend for 2 years, which isn't that long in the grand scheme of things. There hasn't been much of a change in the dividend over the last 2 years. Aichi Financial Group hasn't been paying a dividend for very long, so we wouldn't get to excited about its record of growth just yet.

Dividend Growth Potential Is Shaky

The company's investors will be pleased to have been receiving dividend income for some time. Let's not jump to conclusions as things might not be as good as they appear on the surface. Aichi Financial Group's earnings per share has shrunk at 39% a year over the past five years. Such rapid declines definitely have the potential to constrain dividend payments if the trend continues into the future.

Aichi Financial Group's Dividend Doesn't Look Sustainable

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Aichi Financial Group's payments, as there could be some issues with sustaining them into the future. While Aichi Financial Group is earning enough to cover the dividend, we are generally unimpressed with its future prospects. We don't think Aichi Financial Group is a great stock to add to your portfolio if income is your focus.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Are management backing themselves to deliver performance? Check their shareholdings in Aichi Financial Group in our latest insider ownership analysis. 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.