Sumitomo Mitsui Financial Group's (TSE:8316) Dividend Will Be Increased To ¥79.00

Sumitomo Mitsui Financial Group, Inc. (TSE:8316) will increase its dividend from last year's comparable payment on the 21st of July to ¥79.00. This takes the annual payment to 3.3% of the current stock price, which is about average for the industry.

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Sumitomo Mitsui Financial Group's Earnings Will Easily Cover The Distributions

We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue.

Having distributed dividends for at least 10 years, Sumitomo Mitsui Financial Group has a long history of paying out a part of its earnings to shareholders. Past distributions do not necessarily guarantee future ones, but Sumitomo Mitsui Financial Group's payout ratio of 79% is a good sign as this means that earnings decently cover dividends.

Over the next year, EPS is forecast to expand by 18.1%. Assuming the dividend continues along recent trends, our estimates say the future payout ratio could reach 81% - on the higher side, but we wouldn't necessarily say this is unsustainable.

View our latest analysis for Sumitomo Mitsui Financial Group

Sumitomo Mitsui Financial Group Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. The annual payment during the last 10 years was ¥43.33 in 2015, and the most recent fiscal year payment was ¥158.00. This implies that the company grew its distributions at a yearly rate of about 14% over that duration. It is good to see that there has been strong dividend growth, and that there haven't been any cuts for a long time.

Dividend Growth Could Be Constrained

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Sumitomo Mitsui Financial Group has seen EPS rising for the last five years, at 81% per annum. EPS is growing rapidly, although the company is also paying out a large portion of its profits as dividends. If earnings keep growing, the dividend may be sustainable, but generally we'd prefer to see a fast growing company reinvest in further growth.

In Summary

In summary, while it's always good to see the dividend being raised, we don't think Sumitomo Mitsui Financial Group's payments are rock solid. We can't deny that the payments have been very stable, but we are a little bit worried about the very high payout ratio. We don't think Sumitomo Mitsui 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. Companies that are growing earnings tend to be the best dividend stocks over the long term. See what the 9 analysts we track are forecasting for Sumitomo Mitsui Financial 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.