Hirakawa Hewtech's (TSE:5821) Shareholders Will Receive A Bigger Dividend Than Last Year

Hirakawa Hewtech Corp.'s (TSE:5821) dividend will be increasing from last year's payment of the same period to ¥23.00 on 9th of June. This makes the dividend yield 3.0%, which is above the industry average.

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Hirakawa Hewtech's Projected Earnings Seem Likely To Cover Future Distributions

If the payments aren't sustainable, a high yield for a few years won't matter that much. However, prior to this announcement, Hirakawa Hewtech's dividend was comfortably covered by both cash flow and earnings. This means that most of what the business earns is being used to help it grow.

Looking forward, earnings per share is forecast to rise by 0.3% over the next year. If the dividend continues on this path, the payout ratio could be 32% by next year, which we think can be pretty sustainable going forward.

Check out our latest analysis for Hirakawa Hewtech

Hirakawa Hewtech Has A Solid Track Record

The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. The dividend has gone from an annual total of ¥11.00 in 2015 to the most recent total annual payment of ¥46.00. This implies that the company grew its distributions at a yearly rate of about 15% over that duration. We can see that payments have shown some very nice upward momentum without faltering, which provides some reassurance that future payments will also be reliable.

The Dividend's Growth Prospects Are Limited

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Earnings per share has been crawling upwards at 2.8% per year. While EPS growth is quite low, Hirakawa Hewtech has the option to increase the payout ratio to return more cash to shareholders.

Hirakawa Hewtech Looks Like A Great Dividend Stock

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

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Now, if you want to look closer, it would be worth checking out our free research on Hirakawa Hewtech management tenure, salary, and performance. Is Hirakawa Hewtech 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.