Fukuoka Financial Group's (TSE:8354) Dividend Will Be ¥57.50

The board of Fukuoka Financial Group, Inc. (TSE:8354) has announced that it will pay a dividend of ¥57.50 per share on the 1st of July. The payment will take the dividend yield to 2.9%, which is in line with the average for the industry.

Check out our latest analysis for Fukuoka Financial Group

Fukuoka Financial Group's Dividend Forecasted To Be Well Covered By Earnings

We like a dividend to be consistent over the long term, so checking whether it is sustainable is important.

Fukuoka Financial Group 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 Fukuoka Financial Group's payout ratio of 50% is a good sign as this means that earnings decently cover dividends.

Over the next year, EPS is forecast to expand by 15.7%. Assuming the dividend continues along recent trends, we think the future payout ratio could be 33% by next year, which is in a pretty sustainable range.

Fukuoka Financial Group Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. Since 2014, the annual payment back then was ¥50.00, compared to the most recent full-year payment of ¥115.00. This works out to be a compound annual growth rate (CAGR) of approximately 8.7% a year over that time. Dividends have grown at a reasonable rate over this period, and without any major cuts in the payment over time, we think this is an attractive combination as it provides a nice boost to shareholder returns.

Fukuoka Financial Group May Find It Hard To Grow The Dividend

Investors could be attracted to the stock based on the quality of its payment history. Earnings have grown at around 2.0% a year for the past five years, which isn't massive but still better than seeing them shrink. Growth of 2.0% may indicate that the company has limited investment opportunity so it is returning its earnings to shareholders instead. This isn't bad in itself, but unless earnings growth pick up we wouldn't expect dividends to grow either.

We Really Like Fukuoka Financial Group's Dividend

Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. Distributions are quite easily covered by earnings, which are also being converted to cash flows. Taking this all into consideration, this looks like it could be a good dividend opportunity.

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. For example, we've picked out 1 warning sign for Fukuoka Financial Group that investors should know about before committing capital to this stock. Is Fukuoka Financial Group 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.