North Pacific BankLtd (TSE:8524) Has Announced That It Will Be Increasing Its Dividend To ¥9.50

North Pacific Bank,Ltd.'s (TSE:8524) dividend will be increasing from last year's payment of the same period to ¥9.50 on 27th of June. Based on this payment, the dividend yield for the company will be 3.5%, which is fairly typical for the industry.

North Pacific BankLtd's Dividend Forecasted To Be Well Covered By Earnings

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

North Pacific BankLtd 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 29%, which means that North Pacific BankLtd would be able to pay its last dividend without pressure on the balance sheet.

Over the next year, EPS is forecast to expand by 22.0%. Assuming the dividend continues along recent trends, we think the future payout ratio could be 33% by next year, which is in a pretty sustainable range.

See our latest analysis for North Pacific BankLtd

Dividend Volatility

The company's dividend history has been marked by instability, with at least one cut in the last 10 years. The annual payment during the last 10 years was ¥7.00 in 2015, and the most recent fiscal year payment was ¥19.00. This works out to be a compound annual growth rate (CAGR) of approximately 11% a year over that time. It is great to see strong growth in the dividend payments, but cuts are concerning as it may indicate the payout policy is too ambitious.

North Pacific BankLtd Could Grow Its Dividend

With a relatively unstable dividend, it's even more important to evaluate if earnings per share is growing, which could point to a growing dividend in the future. We are encouraged to see that North Pacific BankLtd has grown earnings per share at 7.9% per year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for North Pacific BankLtd's prospects of growing its dividend payments in the future.

Our Thoughts On North Pacific BankLtd's Dividend

Overall, it's great to see the dividend being raised and that it is still in a sustainable range. While the payout ratios are a good sign, we are less enthusiastic about the company's dividend record. The payment isn't stellar, but it could make a decent addition to a dividend portfolio.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For example, we've picked out 1 warning sign for North Pacific BankLtd that investors should know about before committing capital to this stock. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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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.