Yamanashi Chuo BankLtd (TSE:8360) Is Due To Pay A Dividend Of ¥25.00

The Yamanashi Chuo Bank,Ltd.'s (TSE:8360) investors are due to receive a payment of ¥25.00 per share on 28th of June. This means the dividend yield will be fairly typical at 2.6%.

See our latest analysis for Yamanashi Chuo BankLtd

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

Unless the payments are sustainable, the dividend yield doesn't mean too much.

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.

Looking forward, earnings per share could rise by 0.4% over the next year if the trend from the last few years continues. If the dividend continues along recent trends, we estimate the future payout ratio will be 30%, which is in the range that makes us comfortable with the sustainability of the dividend.

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 ¥50.00. This means that it has been growing its distributions at 5.2% per annum over that time. It's good to see the dividend growing at a decent rate, but the dividend has been cut at least once in the past. Yamanashi Chuo BankLtd might have put its house in order since then, but we remain cautious.

The Dividend's Growth Prospects Are Limited

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. However, Yamanashi Chuo BankLtd's EPS was effectively flat over the past five years, which could stop the company from paying more every year. If Yamanashi Chuo BankLtd is struggling to find viable investments, it always has the option to increase its payout ratio to pay more to shareholders.

In Summary

Overall, a consistent dividend is a good thing, and we think that Yamanashi Chuo BankLtd has the ability to continue this into the future. 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.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. 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.