Hyakugo Bank (TSE:8368) Has Announced A Dividend Of ¥8.00

The Hyakugo Bank, Ltd. (TSE:8368) has announced that it will pay a dividend of ¥8.00 per share on the 9th of December. Including this payment, the dividend yield on the stock will be 2.5%, which is a modest boost for shareholders' returns.

View our latest analysis for Hyakugo Bank

Hyakugo Bank's Payment Expected To Have Solid Earnings Coverage

It would be nice for the yield to be higher, but we should also check if higher levels of dividend payment would be sustainable.

Having distributed dividends for at least 10 years, Hyakugo 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, Hyakugo Bank's latest earnings report puts its payout ratio at 25%, showing that the company can pay out its dividends comfortably.

If the trend of the last few years continues, EPS will grow by 6.0% over the next 12 months. If the dividend continues along recent trends, we estimate the future payout ratio will be 26%, which is in the range that makes us comfortable with the sustainability of the dividend.

Hyakugo Bank Has A Solid Track Record

The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. The dividend has gone from an annual total of ¥8.00 in 2014 to the most recent total annual payment of ¥16.00. This means that it has been growing its distributions at 7.2% per annum 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.

The Dividend Has Growth Potential

Investors could be attracted to the stock based on the quality of its payment history. We are encouraged to see that Hyakugo Bank has grown earnings per share at 6.0% 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 Hyakugo Bank's Dividend

Overall, we like to see the dividend staying consistent, and we think Hyakugo Bank might even raise payments in the future. 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.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Are management backing themselves to deliver performance? Check their shareholdings in Hyakugo Bank in our latest insider ownership analysis. Is Hyakugo 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.

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