Gunma Bank's (TSE:8334) Dividend Will Be Increased To ¥12.00

The Gunma Bank, Ltd. (TSE:8334) has announced that it will be increasing its dividend from last year's comparable payment on the 28th of June to ¥12.00. Based on this payment, the dividend yield for the company will be 2.7%, which is fairly typical for the industry.

View our latest analysis for Gunma Bank

Gunma 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.

Gunma Bank has a long history of paying out dividends, with its current track record at a minimum of 10 years. Taking data from its last earnings report, calculating for the company's payout ratio shows 25%, which means that Gunma Bank would be able to pay its last dividend without pressure on the balance sheet.

The next year is set to see EPS grow by 6.2%. If the dividend continues along recent trends, we estimate the future payout ratio will be 28%, which is in the range that makes us comfortable with the sustainability of the dividend.

Gunma Bank 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 ¥9.50 in 2014, and the most recent fiscal year payment was ¥24.00. This means that it has been growing its distributions at 9.7% per annum over that time. The growth of the dividend has been pretty reliable, so we think this can offer investors some nice additional income in their portfolio.

Gunma Bank Could Grow Its Dividend

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Gunma Bank has seen EPS rising for the last five years, at 5.2% per annum. Growth in EPS bodes well for the dividend, as does the low payout ratio that the company is currently reporting.

Gunma Bank Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that Gunma Bank 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. 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. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Are management backing themselves to deliver performance? Check their shareholdings in Gunma Bank in our latest insider ownership analysis. 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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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.