Yamanashi Chuo BankLtd's (TSE:8360) Shareholders Will Receive A Bigger Dividend Than Last Year

The board of The Yamanashi Chuo Bank,Ltd. (TSE:8360) has announced that it will be paying its dividend of ¥55.00 on the 4th of December, an increased payment from last year's comparable dividend. This will take the dividend yield to an attractive 4.2%, providing a nice boost to shareholder returns.

While the dividend yield is important for income investors, it is also important to consider any large share price moves, as this will generally outweigh any gains from distributions. Investors will be pleased to see that Yamanashi Chuo BankLtd's stock price has increased by 46% in the last 3 months, which is good for shareholders and can also explain a decrease in the dividend yield.

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Yamanashi Chuo BankLtd's Dividend Forecasted To Be Well Covered By Earnings

A big dividend yield for a few years doesn't mean much if it can't be sustained.

Yamanashi Chuo BankLtd has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. Taking data from its last earnings report, calculating for the company's payout ratio shows 31%, 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 16.6% over the next 12 months. If the dividend continues on this path, the future payout ratio could be 34% by next year, which we think can be pretty sustainable going forward.

View our latest analysis for Yamanashi Chuo BankLtd

Dividend Volatility

Although the company has a long dividend history, it has been cut at least once in the last 10 years. The annual payment during the last 10 years was ¥35.00 in 2015, and the most recent fiscal year payment was ¥110.00. This means that it has been growing its distributions at 12% per annum over that time. Dividends have grown rapidly over this time, but with cuts in the past we are not certain that this stock will be a reliable source of income in the future.

The Dividend Looks Likely To Grow

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. It's encouraging to see that Yamanashi Chuo BankLtd has been growing its earnings per share at 17% a year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for Yamanashi Chuo BankLtd's prospects of growing its dividend payments in the future.

We Really Like Yamanashi Chuo BankLtd's Dividend

Overall, a dividend increase is always good, and we think that Yamanashi Chuo BankLtd is a strong income stock thanks to its track record and growing earnings. Earnings are easily covering distributions, and the company is generating plenty of cash. All in all, this checks a lot of the boxes we look for when choosing an income stock.

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. For example, we've picked out 1 warning sign for Yamanashi Chuo BankLtd that investors should know about before committing capital to this stock. 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.