Yamaguchi Financial Group (TSE:8418) Will Pay A Larger Dividend Than Last Year At ¥32.00

Yamaguchi Financial Group, Inc. (TSE:8418) will increase its dividend from last year's comparable payment on the 10th of December to ¥32.00. This takes the dividend yield to 4.0%, which shareholders will be pleased with.

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Yamaguchi Financial Group's Earnings Will Easily Cover The Distributions

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable.

Yamaguchi Financial Group has a long history of paying out dividends, with its current track record at a minimum of 10 years. Based on Yamaguchi Financial Group's last earnings report, the payout ratio is at a decent 39%, meaning that the company is able to pay out its dividend with a bit of room to spare.

The next year is set to see EPS grow by 15.1%. Assuming the dividend continues along recent trends, we think the future payout ratio could be 36% by next year, which is in a pretty sustainable range.

See our latest analysis for Yamaguchi Financial Group

Yamaguchi Financial Group Has A Solid Track Record

The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. Since 2015, the annual payment back then was ¥14.00, compared to the most recent full-year payment of ¥64.00. This works out to be a compound annual growth rate (CAGR) of approximately 16% a year over that time. Rapidly growing dividends for a long time is a very valuable feature for an income stock.

The Dividend Looks Likely To Grow

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Yamaguchi Financial Group has seen EPS rising for the last five years, at 11% per annum. Yamaguchi Financial Group definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

We Really Like Yamaguchi Financial Group's Dividend

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 of these factors considered, we think this has solid potential as a dividend stock.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. You can also discover whether shareholders are aligned with insider interests by checking our visualisation of insider shareholdings and trades 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.