Nihon Dengi (TSE:1723) Has Announced A Dividend Of ¥71.00

Nihon Dengi Co., Ltd. (TSE:1723) will pay a dividend of ¥71.00 on the 29th of June. However, the dividend yield of 2.0% still remains in a typical range for the industry.

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Nihon Dengi's Future Dividend Projections Appear Well Covered By Earnings

While it is always good to see a solid dividend yield, we should also consider whether the payment is feasible. However, Nihon Dengi's earnings easily cover the dividend. As a result, a large proportion of what it earned was being reinvested back into the business.

The next year is set to see EPS grow by 9.5%. Assuming the dividend continues along recent trends, we think the payout ratio could be 30% by next year, which is in a pretty sustainable range.

Check out our latest analysis for Nihon Dengi

Nihon Dengi Is Still Building Its Track Record

The dividend's track record has been pretty solid, but with only 5 years of history we want to see a few more years of history before making any solid conclusions. Since 2020, the dividend has gone from ¥46.00 total annually to ¥132.00. This implies that the company grew its distributions at a yearly rate of about 23% over that duration. The dividend has been growing rapidly, however with such a short payment history we can't know for sure if payment can continue to grow over the long term, so caution may be warranted.

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. It's encouraging to see that Nihon Dengi has been growing its earnings per share at 19% a year over the past five years. Nihon Dengi definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

Nihon Dengi Looks Like A Great Dividend Stock

Overall, we think that Nihon Dengi could be a great option for a dividend investment, although we would have preferred if the dividend wasn't cut this year. By reducing the dividend, pressure will be taken off the balance sheet, which could help the dividend to be consistent in the future. All of these factors considered, we think this has solid potential as a dividend stock.

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 Nihon Dengi that investors should know about before committing capital to this stock. Is Nihon Dengi 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.