Yamanashi Chuo BankLtd (TSE:8360) Has Announced That It Will Be Increasing Its Dividend To ¥32.00

The Yamanashi Chuo Bank,Ltd. (TSE:8360) has announced that it will be increasing its dividend from last year's comparable payment on the 5th of December to ¥32.00. This makes the dividend yield about the same as the industry average at 3.3%.

Check out our latest analysis for Yamanashi Chuo BankLtd

Yamanashi Chuo BankLtd's Payment Expected To Have Solid Earnings Coverage

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

Having distributed dividends for at least 10 years, Yamanashi Chuo BankLtd has a long history of paying out a part of its earnings to shareholders. Taking data from its last earnings report, calculating for the company's payout ratio shows 30%, which means that Yamanashi Chuo BankLtd would be able to pay its last dividend without pressure on the balance sheet.

If the trend of the last few years continues, EPS will grow by 4.8% over the next 12 months. If the dividend continues on this path, the future payout ratio could be 33% by next year, which we think can be pretty sustainable going forward.

Dividend Volatility

While the company has been paying a dividend for a long time, it has cut the dividend at least once in the last 10 years. The annual payment during the last 10 years was ¥30.00 in 2014, and the most recent fiscal year payment was ¥64.00. This implies that the company grew its distributions at a yearly rate of about 7.9% over that duration. We like to see dividends have grown at a reasonable rate, but with at least one substantial cut in the payments, we're not certain this dividend stock would be ideal for someone intending to live on the income.

Dividend Growth May Be Hard To Achieve

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. Earnings have grown at around 4.8% a year for the past five years, which isn't massive but still better than seeing them shrink. While EPS growth is quite low, Yamanashi Chuo BankLtd has the option to increase the payout ratio to return more cash to shareholders.

In Summary

Overall, this is a reasonable dividend, and it being raised is an added bonus. The dividend has been at reasonable levels historically, but that hasn't translated into a consistent payment. Taking all of this into consideration, the dividend looks viable moving forward, but investors should be mindful that the company has pushed the boundaries of sustainability in the past and may do so again.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Taking the debate a bit further, we've identified 1 warning sign for Yamanashi Chuo BankLtd that investors need to be conscious of moving forward. Is Yamanashi Chuo BankLtd 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.

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