Gunma Bank's (TSE:8334) Dividend Will Be ¥20.00

The Gunma Bank, Ltd. (TSE:8334) will pay a dividend of ¥20.00 on the 23rd of June. This takes the annual payment to 3.8% of the current stock price, which is about average for the industry.

View our latest analysis for Gunma Bank

Gunma Bank'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.

Gunma Bank has a long history of paying out dividends, with its current track record at a minimum of 10 years. Based on Gunma Bank's last earnings report, the payout ratio is at a decent 32%, meaning that the company is able to pay out its dividend with a bit of room to spare.

The next year is set to see EPS grow by 9.8%. If the dividend continues on this path, the future payout ratio could be 39% by next year, which we think can be pretty sustainable going forward.

Gunma Bank Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. Since 2015, the dividend has gone from ¥9.50 total annually to ¥40.00. This works out to be a compound annual growth rate (CAGR) of approximately 15% 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

The company's investors will be pleased to have been receiving dividend income for some time. Gunma Bank has impressed us by growing EPS at 14% 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.

We Really Like Gunma Bank's Dividend

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. Earnings are easily covering distributions, and the company is generating plenty of cash. All of these factors considered, we think this has solid potential as a dividend stock.

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. See if management have their own wealth at stake, by checking insider shareholdings in Gunma Bank stock. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

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