Hyakugo Bank's (TSE:8368) Dividend Will Be ¥8.00

The board of The Hyakugo Bank, Ltd. (TSE:8368) has announced that it will pay a dividend of ¥8.00 per share on the 9th of December. This means the dividend yield will be fairly typical at 2.9%.

View our latest analysis for Hyakugo Bank

Hyakugo Bank's Earnings Will Easily Cover The Distributions

We aren't too impressed by dividend yields unless they can be sustained over time.

Hyakugo Bank has a long history of paying out dividends, with its current track record at a minimum of 10 years. While past data isn't a guarantee for the future, Hyakugo Bank's latest earnings report puts its payout ratio at 24%, showing that the company can pay out its dividends comfortably.

If the trend of the last few years continues, EPS will grow by 4.7% over the next 12 months. Assuming the dividend continues along recent trends, we think the future payout ratio could be 26% by next year, which is in a pretty sustainable range.

Hyakugo Bank Has A Solid Track Record

The company has an extended history of paying stable dividends. The dividend has gone from an annual total of ¥8.00 in 2014 to the most recent total annual payment of ¥16.00. This works out to be a compound annual growth rate (CAGR) of approximately 7.2% a year over that time. Companies like this can be very valuable over the long term, if the decent rate of growth can be maintained.

The Dividend's Growth Prospects Are Limited

Investors could be attracted to the stock based on the quality of its payment history. Earnings has been rising at 4.7% per annum over the last five years, which admittedly is a bit slow. If Hyakugo Bank is struggling to find viable investments, it always has the option to increase its payout ratio to pay more to shareholders.

Hyakugo Bank Looks Like A Great Dividend Stock

In summary, it is good to see that the dividend is staying consistent, and we don't think there is any reason to suspect this might change over the medium term. Distributions are quite easily covered by earnings, which are also being converted to cash flows. Taking this all into consideration, this looks like it could be a good dividend opportunity.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. However, there are other things to consider for investors when analysing stock performance. Are management backing themselves to deliver performance? Check their shareholdings in Hyakugo Bank in our latest insider ownership analysis. If you are a dividend investor, you might also want to look at our curated list of high yield 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.