Resona Holdings (TSE:8308) Is Paying Out A Larger Dividend Than Last Year

Resona Holdings, Inc. (TSE:8308) has announced that it will be increasing its dividend from last year's comparable payment on the 10th of December to ¥14.50. Even though the dividend went up, the yield is still quite low at only 2.1%.

While the dividend yield is important for income investors, it is also important to consider any large share price moves, as this will generally outweigh any gains from distributions. Investors will be pleased to see that Resona Holdings' stock price has increased by 34% in the last 3 months, which is good for shareholders and can also explain a decrease in the dividend yield.

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Resona 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.

Resona Holdings has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. Based on Resona Holdings' last earnings report, the payout ratio is at a decent 27%, meaning that the company is able to pay out its dividend with a bit of room to spare.

Looking forward, earnings per share is forecast to rise by 10.0% over the next year. If the dividend continues on this path, the future payout ratio could be 28% by next year, which we think can be pretty sustainable going forward.

View our latest analysis for Resona Holdings

Resona Holdings Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. Since 2015, the annual payment back then was ¥17.00, compared to the most recent full-year payment of ¥29.00. This works out to be a compound annual growth rate (CAGR) of approximately 5.5% a year over that time. The dividend has been growing very nicely for a number of years, and has given its shareholders some nice income in their portfolios.

We Could See Resona Holdings' Dividend Growing

The company's investors will be pleased to have been receiving dividend income for some time. Resona Holdings has impressed us by growing EPS at 7.0% per year over the past five years. Resona Holdings definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

We Really Like Resona Holdings' Dividend

Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All of these factors considered, we think this has solid potential as a dividend stock.

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. Companies that are growing earnings tend to be the best dividend stocks over the long term. See what the 8 analysts we track are forecasting for Resona Holdings for free with public analyst estimates for the company. 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.