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

The board of Resona Holdings, Inc. (TSE:8308) has announced that it will be paying its dividend of ¥14.50 on the 10th of December, an increased payment from last year's comparable dividend. Despite this raise, the dividend yield of 1.9% is only a modest boost to shareholder returns.

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Resona Holdings' Payment Expected To Have Solid Earnings Coverage

Even a low dividend yield can be attractive if it is sustained for years on end.

Resona Holdings has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. Past distributions do not necessarily guarantee future ones, but Resona Holdings' payout ratio of 25% is a good sign as this means that earnings decently cover dividends.

Over the next year, EPS is forecast to expand by 8.9%. If the dividend continues along recent trends, we estimate the future payout ratio will be 26%, which is in the range that makes us comfortable with the sustainability of the dividend.

Check out our latest analysis for Resona Holdings

Resona Holdings Has A Solid Track Record

The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. Since 2015, the dividend has gone from ¥17.00 total annually to ¥29.00. This implies that the company grew its distributions at a yearly rate of about 5.5% over that duration. The growth of the dividend has been pretty reliable, so we think this can offer investors some nice additional income in their portfolio.

The Dividend Looks Likely To Grow

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Resona Holdings has seen EPS rising for the last five years, at 11% per annum. Resona Holdings definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

Resona Holdings Looks Like A Great Dividend Stock

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All in all, this checks a lot of the boxes we look for when choosing an income stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. However, there are other things to consider for investors when analysing stock performance. Earnings growth generally bodes well for the future value of company dividend payments. See if the 8 Resona Holdings analysts we track are forecasting continued growth with our free report on 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.