Shibaura MachineLtd (TSE:6104) Has Affirmed Its Dividend Of ¥70.00

Shibaura Machine Co.,Ltd. (TSE:6104) has announced that it will pay a dividend of ¥70.00 per share on the 4th of December. This means the annual payment is 4.0% of the current stock price, which is above the average for the industry.

View our latest analysis for Shibaura MachineLtd

Shibaura MachineLtd's Dividend Is Well Covered By Earnings

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. However, Shibaura MachineLtd's earnings easily cover the dividend. This means that most of what the business earns is being used to help it grow.

EPS is set to fall by 16.4% over the next 12 months. Assuming the dividend continues along recent trends, we believe the payout ratio could be 24%, which we are pretty comfortable with and we think is feasible on an earnings basis.

Shibaura MachineLtd 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 ¥35.00, compared to the most recent full-year payment of ¥140.00. This works out to be a compound annual growth rate (CAGR) of approximately 15% a year 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 Looks Likely To Grow

The company's investors will be pleased to have been receiving dividend income for some time. It's encouraging to see that Shibaura MachineLtd has been growing its earnings per share at 37% a year over the past five years. Rapid earnings growth and a low payout ratio suggest this company has been effectively reinvesting in its business. Should that continue, this company could have a bright future.

Shibaura MachineLtd Looks Like A Great Dividend Stock

Overall, we like to see the dividend staying consistent, and we think Shibaura MachineLtd might even raise payments in the future. The distributions are easily covered by earnings, and there is plenty of cash being generated as well. However, it is worth noting that the earnings are expected to fall over the next year, which may not change the long term outlook, but could affect the dividend payment in the next 12 months. 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. However, there are other things to consider for investors when analysing stock performance. For example, we've identified 2 warning signs for Shibaura MachineLtd (1 can't be ignored!) that you should be aware of before investing. Is Shibaura MachineLtd not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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