Resona Holdings' (TSE:8308) Upcoming Dividend Will Be Larger Than Last Year's

Resona Holdings, Inc.'s (TSE:8308) dividend will be increasing from last year's payment of the same period to ¥11.50 on 9th of December. Although the dividend is now higher, the yield is only 2.2%, which is below the industry average.

See our latest analysis for Resona Holdings

Resona Holdings' Payment Expected To Have Solid Earnings Coverage

If it is predictable over a long period, even low dividend yields can be attractive.

Having distributed dividends for at least 10 years, Resona 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 29%, which means that Resona Holdings would be able to pay its last dividend without pressure on the balance sheet.

The next year is set to see EPS grow by 10.1%. If the dividend continues along recent trends, we estimate the future payout ratio will be 27%, which is in the range that makes us comfortable with the sustainability of the dividend.

Resona Holdings Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2014, the dividend has gone from ¥15.00 total annually to ¥23.00. This implies that the company grew its distributions at a yearly rate of about 4.4% over that duration. Dividends have grown relatively slowly, which is not great, but some investors may value the relative consistency of the dividend.

Dividend Growth May Be Hard To Achieve

Investors could be attracted to the stock based on the quality of its payment history. However, Resona Holdings has only grown its earnings per share at 4.8% per annum over the past five years. While EPS growth is quite low, Resona Holdings has the option to increase the payout ratio to return more cash to shareholders.

We Really Like Resona Holdings' Dividend

Overall, a dividend increase is always good, and we think that Resona Holdings is a strong income stock thanks to its track record and growing earnings. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Taking the debate a bit further, we've identified 1 warning sign for Resona Holdings that investors need to be conscious of moving forward. Is Resona 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.