Awa Bank (TSE:8388) Has Announced A Dividend Of ¥50.00

The board of The Awa Bank, Ltd. (TSE:8388) has announced that it will pay a dividend on the 5th of December, with investors receiving ¥50.00 per share. This takes the annual payment to 2.8% of the current stock price, which is about average for the industry.

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Awa Bank's Earnings Will Easily Cover The Distributions

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

Awa Bank has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. Based on Awa Bank's last earnings report, the payout ratio is at a decent 30%, meaning that the company is able to pay out its dividend with a bit of room to spare.

Over the next year, EPS could expand by 6.4% if recent trends continue. If the dividend continues along recent trends, we estimate the future payout ratio will be 31%, which is in the range that makes us comfortable with the sustainability of the dividend.

See our latest analysis for Awa Bank

Dividend Volatility

The company's dividend history has been marked by instability, with at least one cut in the last 10 years. The dividend has gone from an annual total of ¥45.00 in 2015 to the most recent total annual payment of ¥100.00. This means that it has been growing its distributions at 8.3% per annum over that time. A reasonable rate of dividend growth is good to see, but we're wary that the dividend history is not as solid as we'd like, having been cut at least once.

Awa Bank Could Grow Its Dividend

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. Awa Bank has impressed us by growing EPS at 6.4% per year over the past five years. Awa Bank definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

In Summary

Overall, this is a reasonable dividend, and it being raised is an added bonus. The dividend has been at reasonable levels historically, but that hasn't translated into a consistent payment. The dividend looks okay, but there have been some issues in the past, so we would be a little bit cautious.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. 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 Awa Bank that investors need to be conscious of moving forward. 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.