Iwaki (TSE:6237) Has Announced A Dividend Of ¥35.00

The board of Iwaki Co., Ltd. (TSE:6237) has announced that it will pay a dividend of ¥35.00 per share on the 2nd of December. This will take the dividend yield to an attractive 2.8%, providing a nice boost to shareholder returns.

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Iwaki'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. Before making this announcement, Iwaki was easily earning enough to cover the dividend. As a result, a large proportion of what it earned was being reinvested back into the business.

Looking forward, earnings per share is forecast to rise by 6.1% over the next year. Assuming the dividend continues along recent trends, we think the payout ratio could be 43% by next year, which is in a pretty sustainable range.

Check out our latest analysis for Iwaki

Iwaki's Dividend Has Lacked Consistency

It's comforting to see that Iwaki has been paying a dividend for a number of years now, however it has been cut at least once in that time. Due to this, we are a little bit cautious about the dividend consistency over a full economic cycle. The annual payment during the last 9 years was ¥22.60 in 2016, and the most recent fiscal year payment was ¥76.00. This means that it has been growing its distributions at 14% per annum over that time. Iwaki has grown distributions at a rapid rate despite cutting the dividend at least once in the past. Companies that cut once often cut again, so we would be cautious about buying this stock solely for the dividend income.

The Dividend Looks Likely To Grow

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. We are encouraged to see that Iwaki has grown earnings per share at 16% per year over the past five years. Iwaki definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

We Really Like Iwaki's Dividend

Overall, a dividend increase is always good, and we think that Iwaki 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.

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. As an example, we've identified 1 warning sign for Iwaki that you should be aware of before investing. Is Iwaki 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.