Yamaguchi Financial Group (TSE:8418) Will Pay A Dividend Of ¥30.00

The board of Yamaguchi Financial Group, Inc. (TSE:8418) has announced that it will pay a dividend of ¥30.00 per share on the 30th of June. The payment will take the dividend yield to 3.6%, which is in line with the average for the industry.

See our latest analysis for Yamaguchi Financial Group

Yamaguchi Financial Group's Earnings Will Easily Cover The Distributions

While it is always good to see a solid dividend yield, we should also consider whether the payment is feasible.

Yamaguchi Financial Group has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. While past records don't necessarily translate into future results, the company's payout ratio of 17% also shows that Yamaguchi Financial Group is able to comfortably pay dividends.

Looking forward, earnings per share is forecast to rise by 17.9% over the next year. If the dividend continues along recent trends, we estimate the future payout ratio will be 43%, which is in the range that makes us comfortable with the sustainability of the dividend.

Yamaguchi Financial Group Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. The annual payment during the last 10 years was ¥14.00 in 2015, and the most recent fiscal year payment was ¥60.00. This works out to be a compound annual growth rate (CAGR) of approximately 16% a year over that time. So, dividends have been growing pretty quickly, and even more impressively, they haven't experienced any notable falls during this period.

The Dividend Has Growth Potential

Investors could be attracted to the stock based on the quality of its payment history. We are encouraged to see that Yamaguchi Financial Group has grown earnings per share at 7.5% per year over the past five years. Growth in EPS bodes well for the dividend, as does the low payout ratio that the company is currently reporting.

Yamaguchi Financial Group Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that Yamaguchi Financial Group 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.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. See if management have their own wealth at stake, by checking insider shareholdings in Yamaguchi Financial Group stock. 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.