Yamaguchi Financial Group (TSE:8418) Will Pay A Larger Dividend Than Last Year At ¥30.00

Yamaguchi Financial Group, Inc.'s (TSE:8418) dividend will be increasing from last year's payment of the same period to ¥30.00 on 9th of December. The payment will take the dividend yield to 3.4%, which is in line with the average for the industry.

Check out our latest analysis for Yamaguchi Financial Group

Yamaguchi Financial Group's Payment Expected To Have Solid Earnings Coverage

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. Past distributions do not necessarily guarantee future ones, but Yamaguchi Financial Group's payout ratio of 40% is a good sign as this means that earnings decently cover dividends.

The next year is set to see EPS grow by 17.5%. Assuming the dividend continues along recent trends, we think the future payout ratio could be 42% by next year, which is in a pretty sustainable range.

Yamaguchi Financial Group Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. The dividend has gone from an annual total of ¥12.00 in 2014 to the most recent total annual payment of ¥60.00. This means that it has been growing its distributions at 17% per annum over that time. Rapidly growing dividends for a long time is a very valuable feature for an income stock.

Dividend Growth May Be Hard To Achieve

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Earnings have grown at around 4.3% a year for the past five years, which isn't massive but still better than seeing them shrink. While EPS growth is quite low, Yamaguchi Financial Group has the option to increase the payout ratio to return more cash to shareholders.

Yamaguchi Financial Group Looks Like A Great Dividend Stock

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. All in all, this checks a lot of the boxes we look for when choosing an income 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. 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.

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