Hibiya Engineering (TSE:1982) Has Announced A Dividend Of ¥44.00

The board of Hibiya Engineering, Ltd. (TSE:1982) has announced that it will pay a dividend of ¥44.00 per share on the 26th of June. This takes the annual payment to 2.7% of the current stock price, which is about average for the industry.

Hibiya Engineering's Projected Earnings Seem Likely To Cover Future Distributions

We aren't too impressed by dividend yields unless they can be sustained over time. The last dividend was quite easily covered by Hibiya Engineering's earnings. This means that a large portion of its earnings are being retained to grow the business.

Over the next year, EPS is forecast to expand by 15.7%. If the dividend continues on this path, the payout ratio could be 52% by next year, which we think can be pretty sustainable going forward.

See our latest analysis for Hibiya Engineering

Hibiya Engineering Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. The annual payment during the last 10 years was ¥30.00 in 2015, and the most recent fiscal year payment was ¥88.00. This means that it has been growing its distributions at 11% per annum over that time. So, dividends have been growing pretty quickly, and even more impressively, they haven't experienced any notable falls during this period.

The Dividend's Growth Prospects Are Limited

Investors could be attracted to the stock based on the quality of its payment history. Earnings per share has been crawling upwards at 3.0% per year. Growth of 3.0% may indicate that the company has limited investment opportunity so it is returning its earnings to shareholders instead. This isn't bad in itself, but unless earnings growth pick up we wouldn't expect dividends to grow either.

Hibiya Engineering Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that Hibiya Engineering 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 of these factors considered, we think this has solid potential as a dividend stock.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. You can also discover whether shareholders are aligned with insider interests by checking our visualisation of insider shareholdings and trades in Hibiya Engineering stock. Is Hibiya Engineering not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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