Fukuoka Financial Group (TSE:8354) Is Increasing Its Dividend To ¥65.00

Fukuoka Financial Group, Inc. (TSE:8354) will increase its dividend from last year's comparable payment on the 9th of December to ¥65.00. Based on this payment, the dividend yield for the company will be 3.0%, which is fairly typical for the industry.

See our latest analysis for Fukuoka Financial Group

Fukuoka Financial Group's Earnings Will Easily Cover The Distributions

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

Having distributed dividends for at least 10 years, Fukuoka Financial Group has a long history of paying out a part of its earnings to shareholders. Based on Fukuoka Financial Group's last earnings report, the payout ratio is at a decent 50%, meaning that the company is able to pay out its dividend with a bit of room to spare.

Over the next year, EPS is forecast to expand by 9.4%. Assuming the dividend continues along recent trends, we think the future payout ratio could be 37% by next year, which is in a pretty sustainable range.

Fukuoka Financial Group Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2014, the dividend has gone from ¥55.00 total annually to ¥130.00. This implies that the company grew its distributions at a yearly rate of about 9.0% over that duration. Companies like this can be very valuable over the long term, if the decent rate of growth can be maintained.

Fukuoka Financial Group May Find It Hard To Grow The Dividend

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Fukuoka Financial Group hasn't seen much change in its earnings per share over the last five years. Growth of 1.5% may indicate that the company has limited investment opportunity so it is returning its earnings to shareholders instead. While this isn't necessarily a negative, it definitely signals that dividend growth could be constrained in the future unless earnings start to pick up again.

Fukuoka Financial Group Looks Like A Great Dividend Stock

Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. Earnings are easily covering distributions, and the company is generating plenty of cash. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. However, there are other things to consider for investors when analysing stock performance. As an example, we've identified 1 warning sign for Fukuoka Financial Group that you should be aware of before investing. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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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.

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