Bank of Nagoya's (TSE:8522) Dividend Will Be Increased To ¥110.00

The Bank of Nagoya, Ltd. (TSE:8522) has announced that it will be increasing its dividend from last year's comparable payment on the 9th of December to ¥110.00. This makes the dividend yield about the same as the industry average at 2.9%.

See our latest analysis for Bank of Nagoya

Bank of Nagoya's 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 Nagoya has a long history of paying out dividends, with its current track record at a minimum of 10 years. Based on Bank of Nagoya's last earnings report, the payout ratio is at a decent 26%, meaning that the company is able to pay out its dividend with a bit of room to spare.

Over the next year, EPS could expand by 13.3% if recent trends continue. Assuming the dividend continues along recent trends, we think the future payout ratio could be 32% by next year, which is in a pretty sustainable range.

Bank of Nagoya Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. The annual payment during the last 10 years was ¥65.00 in 2014, and the most recent fiscal year payment was ¥220.00. This implies that the company grew its distributions at a yearly rate of about 13% over that duration. Rapidly growing dividends for a long time is a very valuable feature for an income stock.

The Dividend Looks Likely To Grow

The company's investors will be pleased to have been receiving dividend income for some time. It's encouraging to see that Bank of Nagoya has been growing its earnings per share at 13% a year over the past five years. A low payout ratio and decent growth suggests that the company is reinvesting well, and it also has plenty of room to increase the dividend over time.

Bank of Nagoya Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that Bank of Nagoya 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. Now, if you want to look closer, it would be worth checking out our free research on Bank of Nagoya management tenure, salary, and performance. 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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