Yahagi ConstructionLtd (TSE:1870) Has Announced That It Will Be Increasing Its Dividend To ¥40.00

Yahagi Construction Co.,Ltd.'s (TSE:1870) dividend will be increasing from last year's payment of the same period to ¥40.00 on 29th of November. This will take the annual payment to 5.4% of the stock price, which is above what most companies in the industry pay.

See our latest analysis for Yahagi ConstructionLtd

Yahagi ConstructionLtd's Earnings Easily Cover The Distributions

If the payments aren't sustainable, a high yield for a few years won't matter that much. However, Yahagi ConstructionLtd's earnings easily cover the dividend. This means that most of what the business earns is being used to help it grow.

Over the next year, EPS could expand by 7.8% if recent trends continue. Assuming the dividend continues along recent trends, we think the payout ratio could be 48% by next year, which is in a pretty sustainable range.

Yahagi ConstructionLtd Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. Since 2014, the annual payment back then was ¥14.00, compared to the most recent full-year payment of ¥80.00. This means that it has been growing its distributions at 19% per annum over that time. Rapidly growing dividends for a long time is a very valuable feature for an income stock.

We Could See Yahagi ConstructionLtd's Dividend Growing

Investors could be attracted to the stock based on the quality of its payment history. It's encouraging to see that Yahagi ConstructionLtd has been growing its earnings per share at 7.8% 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.

Yahagi ConstructionLtd Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that Yahagi ConstructionLtd 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. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Are management backing themselves to deliver performance? Check their shareholdings in Yahagi ConstructionLtd in our latest insider ownership analysis. 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.