Keiyo Bank (TSE:8544) Is Paying Out A Larger Dividend Than Last Year

The board of The Keiyo Bank, Ltd. (TSE:8544) has announced that it will be paying its dividend of ¥13.00 on the 4th of December, an increased payment from last year's comparable dividend. The payment will take the dividend yield to 3.4%, which is in line with the average for the industry.

View our latest analysis for Keiyo Bank

Keiyo Bank'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.

Keiyo Bank has a long history of paying out dividends, with its current track record at a minimum of 10 years. While past data isn't a guarantee for the future, Keiyo Bank's latest earnings report puts its payout ratio at 23%, showing that the company can pay out its dividends comfortably.

If the trend of the last few years continues, EPS will grow by 8.2% over the next 12 months. If the dividend continues along recent trends, we estimate the future payout ratio will be 22%, which is in the range that makes us comfortable with the sustainability of the dividend.

Dividend Volatility

Although the company has a long dividend history, it has been cut at least once in the last 10 years. The annual payment during the last 10 years was ¥20.00 in 2014, and the most recent fiscal year payment was ¥26.00. This means that it has been growing its distributions at 2.7% per annum over that time. We're glad to see the dividend has risen, but with a limited rate of growth and fluctuations in the payments the total shareholder return may be limited.

The Dividend Has Growth Potential

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. It's encouraging to see that Keiyo Bank has been growing its earnings per share at 8.2% a year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for Keiyo Bank's prospects of growing its dividend payments in the future.

Keiyo Bank Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that Keiyo Bank is a strong income stock thanks to its track record and growing earnings. 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.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For example, we've picked out 1 warning sign for Keiyo Bank that investors should know about before committing capital to this stock. Is Keiyo Bank not quite the opportunity you were looking for? Why not check out our selection of top 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.