FIDEA Holdings (TSE:8713) Is Paying Out A Dividend Of ¥37.50

The board of FIDEA Holdings Co. Ltd. (TSE:8713) has announced that it will pay a dividend on the 2nd of December, with investors receiving ¥37.50 per share. The dividend yield will be 4.8% based on this payment which is still above the industry average.

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FIDEA Holdings' 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.

Having distributed dividends for at least 10 years, FIDEA Holdings has a long history of paying out a part of its earnings to shareholders. Past distributions do not necessarily guarantee future ones, but FIDEA Holdings' payout ratio of 48% is a good sign as this means that earnings decently cover dividends.

If the trend of the last few years continues, EPS will grow by 25.7% over the next 12 months. Assuming the dividend continues along recent trends, we think the future payout ratio could be 39% by next year, which is in a pretty sustainable range.

See our latest analysis for FIDEA Holdings

FIDEA Holdings Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. Since 2015, the dividend has gone from ¥50.00 total annually to ¥75.00. This works out to be a compound annual growth rate (CAGR) of approximately 4.1% a year over that time. Slow and steady dividend growth might not sound that exciting, but dividends have been stable for ten years, which we think makes this a fairly attractive offer.

The Dividend Looks Likely To Grow

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. FIDEA Holdings has seen EPS rising for the last five years, at 26% per annum. The company's earnings per share has grown rapidly in recent years, and it has a good balance between reinvesting and paying dividends to shareholders, so we think that FIDEA Holdings could prove to be a strong dividend payer.

We Really Like FIDEA Holdings' Dividend

Overall, we like to see the dividend staying consistent, and we think FIDEA Holdings might even raise payments in the future. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. All in all, this checks a lot of the boxes we look for when choosing an income stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. As an example, we've identified 1 warning sign for FIDEA Holdings that you should be aware of before investing. Is FIDEA Holdings 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.