Oita Bank (TSE:8392) Has Announced A Dividend Of ¥50.00

The Oita Bank, Ltd.'s (TSE:8392) investors are due to receive a payment of ¥50.00 per share on 9th of December. This makes the dividend yield about the same as the industry average at 3.0%.

See our latest analysis for Oita Bank

Oita Bank's Payment Expected To Have Solid Earnings Coverage

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

Having distributed dividends for at least 10 years, Oita Bank has a long history of paying out a part of its earnings to shareholders. Using data from its latest earnings report, Oita Bank's payout ratio sits at 19%, an extremely comfortable number that shows that it can pay its dividend.

Looking forward, earnings per share could rise by 9.7% over the next year if the trend from the last few years continues. If the dividend continues along recent trends, we estimate the future payout ratio will be 19%, which is in the range that makes us comfortable with the sustainability of the dividend.

Dividend Volatility

The company's dividend history has been marked by instability, with at least one cut in the last 10 years. Since 2014, the annual payment back then was ¥60.00, compared to the most recent full-year payment of ¥100.00. This works out to be a compound annual growth rate (CAGR) of approximately 5.2% a year over that time. It's good to see the dividend growing at a decent rate, but the dividend has been cut at least once in the past. Oita Bank might have put its house in order since then, but we remain cautious.

Oita Bank Could Grow Its Dividend

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. Oita Bank has seen EPS rising for the last five years, at 9.7% per annum. With a decent amount of growth and a low payout ratio, we think this bodes well for Oita Bank's prospects of growing its dividend payments in the future.

We Really Like Oita Bank's Dividend

Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. Earnings are easily covering distributions, and the company is generating plenty of cash. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Taking the debate a bit further, we've identified 1 warning sign for Oita Bank that investors need to be conscious of moving forward. Is Oita 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.