Chiba Bank (TSE:8331) Is Increasing Its Dividend To ¥22.00

The Chiba Bank, Ltd. (TSE:8331) will increase its dividend from last year's comparable payment on the 27th of June to ¥22.00. The payment will take the dividend yield to 3.4%, which is in line with the average for the industry.

View our latest analysis for Chiba Bank

Chiba Bank's Dividend Forecasted To Be Well Covered By Earnings

We aren't too impressed by dividend yields unless they can be sustained over time.

Chiba Bank has a long history of paying out dividends, with its current track record at a minimum of 10 years. Past distributions do not necessarily guarantee future ones, but Chiba Bank's payout ratio of 37% is a good sign as this means that earnings decently cover dividends.

Looking forward, earnings per share is forecast to rise by 13.1% over the next year. If the dividend continues on this path, the future payout ratio could be 41% by next year, which we think can be pretty sustainable going forward.

Dividend Volatility

While the company has been paying a dividend for a long time, it has cut the dividend at least once in the last 10 years. The annual payment during the last 10 years was ¥12.00 in 2015, and the most recent fiscal year payment was ¥44.00. This means that it has been growing its distributions at 14% per annum over that time. It is great to see strong growth in the dividend payments, but cuts are concerning as it may indicate the payout policy is too ambitious.

We Could See Chiba Bank's Dividend Growing

Given that the dividend has been cut in the past, we need to check if earnings are growing and if that might lead to stronger dividends in the future. Chiba Bank has impressed us by growing EPS at 7.3% per year over the past five years. A low payout ratio and decent growth suggests that the company is reinvesting well, and it also has plenty of room to increase the dividend over time.

In Summary

Overall, this is a reasonable dividend, and it being raised is an added bonus. While the payout ratios are a good sign, we are less enthusiastic about the company's dividend record. The dividend looks okay, but there have been some issues in the past, so we would be a little bit cautious.

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. For instance, we've picked out 1 warning sign for Chiba Bank that investors should take into consideration. Is Chiba Bank not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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