Sumitomo Mitsui Trust Group (TSE:8309) Is Increasing Its Dividend To ¥90.00

Sumitomo Mitsui Trust Group, Inc. (TSE:8309) has announced that it will be increasing its dividend from last year's comparable payment on the 23rd of June to ¥90.00. This will take the annual payment to 4.0% of the stock price, which is above what most companies in the industry pay.

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Sumitomo Mitsui Trust Group's Dividend Forecasted To Be Well Covered By Earnings

If the payments aren't sustainable, a high yield for a few years won't matter that much.

Sumitomo Mitsui Trust Group has a long history of paying out dividends, with its current track record at a minimum of 10 years. Based on Sumitomo Mitsui Trust Group's last earnings report, the payout ratio is at a decent 38%, meaning that the company is able to pay out its dividend with a bit of room to spare.

Over the next year, EPS is forecast to expand by 4.5%. If the dividend continues along recent trends, we estimate the future payout ratio will be 42%, which is in the range that makes us comfortable with the sustainability of the dividend.

See our latest analysis for Sumitomo Mitsui Trust Group

Sumitomo Mitsui Trust Group 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. The dividend has gone from an annual total of ¥55.00 in 2015 to the most recent total annual payment of ¥180.00. This works out to be a compound annual growth rate (CAGR) of approximately 13% a year over that time. So, dividends have been growing pretty quickly, and even more impressively, they haven't experienced any notable falls during this period.

The Dividend Looks Likely To Grow

Investors could be attracted to the stock based on the quality of its payment history. We are encouraged to see that Sumitomo Mitsui Trust Group has grown earnings per share at 18% per year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for Sumitomo Mitsui Trust Group's prospects of growing its dividend payments in the future.

We Really Like Sumitomo Mitsui Trust Group's Dividend

Overall, a dividend increase is always good, and we think that Sumitomo Mitsui Trust Group is a strong income stock thanks to its track record and growing earnings. Earnings are easily covering distributions, and the company is generating plenty of cash. 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. However, there are other things to consider for investors when analysing stock performance. Companies that are growing earnings tend to be the best dividend stocks over the long term. See what the 7 analysts we track are forecasting for Sumitomo Mitsui Trust Group for free with public analyst estimates for the company. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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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.