San-in Godo BankLtd's (TSE:8381) Dividend Will Be Increased To ¥28.00

The San-in Godo Bank,Ltd. (TSE:8381) will increase its dividend from last year's comparable payment on the 9th of December to ¥28.00. This will take the annual payment to 4.3% of the stock price, which is above what most companies in the industry pay.

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San-in Godo BankLtd's Earnings Will Easily Cover The Distributions

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

Having distributed dividends for at least 10 years, San-in Godo BankLtd has a long history of paying out a part of its earnings to shareholders. Past distributions do not necessarily guarantee future ones, but San-in Godo BankLtd's payout ratio of 35% is a good sign as this means that earnings decently cover dividends.

Over the next year, EPS could expand by 13.0% if recent trends continue. If the dividend continues on this path, the future payout ratio could be 42% by next year, which we think can be pretty sustainable going forward.

See our latest analysis for San-in Godo BankLtd

Dividend Volatility

Although the company has a long dividend history, it has been cut at least once in the last 10 years. Since 2015, the annual payment back then was ¥14.00, compared to the most recent full-year payment of ¥56.00. This works out to be a compound annual growth rate (CAGR) of approximately 15% a year over that time. San-in Godo BankLtd has grown distributions at a rapid rate despite cutting the dividend at least once in the past. Companies that cut once often cut again, so we would be cautious about buying this stock solely for the dividend income.

The Dividend Looks Likely To Grow

With a relatively unstable dividend, it's even more important to evaluate if earnings per share is growing, which could point to a growing dividend in the future. San-in Godo BankLtd has seen EPS rising for the last five years, at 13% per annum. A low payout ratio and decent growth suggests that the company is reinvesting well, and it also has plenty of room to increase the dividend over time.

San-in Godo BankLtd Looks Like A Great Dividend Stock

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All of these factors considered, we think this has solid potential as a dividend stock.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Taking the debate a bit further, we've identified 1 warning sign for San-in Godo BankLtd that investors need to be conscious of moving forward. 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.