Hachijuni Bank's (TSE:8359) Shareholders Will Receive A Bigger Dividend Than Last Year

The Hachijuni Bank, Ltd. (TSE:8359) will increase its dividend from last year's comparable payment on the 24th of June to ¥21.00. This makes the dividend yield about the same as the industry average at 3.5%.

View our latest analysis for Hachijuni Bank

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

We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue.

Having distributed dividends for at least 10 years, Hachijuni Bank has a long history of paying out a part of its earnings to shareholders. While past data isn't a guarantee for the future, Hachijuni Bank's latest earnings report puts its payout ratio at 19%, showing that the company can pay out its dividends comfortably.

Looking forward, earnings per share is forecast to rise by 12.5% over the next year. Assuming the dividend continues along recent trends, we think the future payout ratio could be 41% by next year, which is in a pretty sustainable range.

Dividend Volatility

The company has a long dividend track record, but it doesn't look great with cuts in the past. Since 2015, the dividend has gone from ¥12.00 total annually to ¥34.00. This implies that the company grew its distributions at a yearly rate of about 11% over that duration. It is great to see strong growth in the dividend payments, but cuts are concerning as it may indicate the payout policy is too ambitious.

The Dividend Has Growth Potential

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. We are encouraged to see that Hachijuni Bank has grown earnings per share at 8.7% per year over the past five years. Growth in EPS bodes well for the dividend, as does the low payout ratio that the company is currently reporting.

We Really Like Hachijuni Bank's Dividend

Overall, a dividend increase is always good, and we think that Hachijuni Bank is a strong income stock thanks to its track record and growing earnings. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. 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. However, there are other things to consider for investors when analysing stock performance. For instance, we've picked out 1 warning sign for Hachijuni Bank that investors should take into consideration. Is Hachijuni 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.