Bank of The Ryukyus (TSE:8399) Has Announced A Dividend Of ¥27.00

The board of Bank of The Ryukyus, Limited (TSE:8399) has announced that it will pay a dividend on the 25th of June, with investors receiving ¥27.00 per share. This makes the dividend yield about the same as the industry average at 3.0%.

While the dividend yield is important for income investors, it is also important to consider any large share price moves, as this will generally outweigh any gains from distributions. Investors will be pleased to see that Bank of The Ryukyus' stock price has increased by 30% in the last 3 months, which is good for shareholders and can also explain a decrease in the dividend yield.

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Bank of The Ryukyus' Payment Expected To Have Solid Earnings Coverage

We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue.

Bank of The Ryukyus has a long history of paying out dividends, with its current track record at a minimum of 10 years. Taking data from its last earnings report, calculating for the company's payout ratio shows 25%, which means that Bank of The Ryukyus would be able to pay its last dividend without pressure on the balance sheet.

Over the next year, EPS could expand by 17.5% if recent trends continue. If the dividend continues on this path, the future payout ratio could be 25% by next year, which we think can be pretty sustainable going forward.

Check out our latest analysis for Bank of The Ryukyus

Dividend Volatility

Although the company has a long dividend history, it has been cut at least once in the last 10 years. The dividend has gone from an annual total of ¥30.00 in 2015 to the most recent total annual payment of ¥54.00. This means that it has been growing its distributions at 6.1% per annum over that time. We like to see dividends have grown at a reasonable rate, but with at least one substantial cut in the payments, we're not certain this dividend stock would be ideal for someone intending to live on the income.

The Dividend Looks Likely To Grow

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. Bank of The Ryukyus has seen EPS rising for the last five years, at 18% per annum. Bank of The Ryukyus definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

Bank of The Ryukyus Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that Bank of The Ryukyus is a strong income stock thanks to its track record and growing earnings. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All in all, this checks a lot of the boxes we look for when choosing an income stock.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. As an example, we've identified 1 warning sign for Bank of The Ryukyus that you should be aware of before investing. Is Bank of The Ryukyus not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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