Sumitomo Mitsui Financial Group's (TSE:8316) Upcoming Dividend Will Be Larger Than Last Year's

The board of Sumitomo Mitsui Financial Group, Inc. (TSE:8316) has announced that it will be paying its dividend of ¥165.00 on the 2nd of December, an increased payment from last year's comparable dividend. This takes the annual payment to 3.7% of the current stock price, which is about average for the industry.

Check out our latest analysis for Sumitomo Mitsui Financial Group

Sumitomo Mitsui Financial Group's Payment Expected To Have Solid Earnings Coverage

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 36% is a good sign as this means that earnings decently cover dividends.

Looking forward, earnings per share is forecast to rise by 10.6% over the next year. If the dividend continues along recent trends, we estimate the future payout ratio will be 38%, which is in the range that makes us comfortable with the sustainability of the dividend.

Sumitomo Mitsui Financial 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. Since 2014, the dividend has gone from ¥120.00 total annually to ¥330.00. This works out to be a compound annual growth rate (CAGR) of approximately 11% 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

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Sumitomo Mitsui Financial Group has impressed us by growing EPS at 15% 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 Financial Group's prospects of growing its dividend payments in the future.

Sumitomo Mitsui Financial Group 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 of these factors considered, we think this has solid potential as a dividend stock.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Earnings growth generally bodes well for the future value of company dividend payments. See if the 9 Sumitomo Mitsui Financial Group analysts we track are forecasting continued growth with our free report on analyst estimates for the company. Is Sumitomo Mitsui Financial Group not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.