77 Bank (TSE:8341) Is Due To Pay A Dividend Of ¥55.00

The 77 Bank, Ltd.'s (TSE:8341) investors are due to receive a payment of ¥55.00 per share on 1st of July. This makes the dividend yield about the same as the industry average at 2.7%.

View our latest analysis for 77 Bank

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

While it is always good to see a solid dividend yield, we should also consider whether the payment is feasible.

77 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 77 Bank's payout ratio of 26% is a good sign as this means that earnings decently cover dividends.

Looking forward, earnings per share is forecast to fall by 7.9% over the next year. But if the dividend continues along recent trends, we estimate the future payout ratio could be 32%, which we would consider to be quite comfortable looking forward, with most of the company's earnings left over to grow the business in the future.

77 Bank Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. The dividend has gone from an annual total of ¥35.00 in 2014 to the most recent total annual payment of ¥110.00. This means that it has been growing its distributions at 12% per annum over that time. We can see that payments have shown some very nice upward momentum without faltering, which provides some reassurance that future payments will also be reliable.

The Dividend Looks Likely To Grow

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. We are encouraged to see that 77 Bank has grown earnings per share 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 77 Bank's prospects of growing its dividend payments in the future.

77 Bank 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. The company is generating plenty of cash, and the earnings also quite easily cover the distributions. We should point out that the earnings are expected to fall over the next 12 months, which won't be a problem if this doesn't become a trend, but could cause some turbulence in the next year. All in all, this checks a lot of the boxes we look for when choosing an income stock.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For example, we've picked out 1 warning sign for 77 Bank that investors should know about before committing capital to this stock. Is 77 Bank not quite the opportunity you were looking for? Why not check out our selection of top 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.