Daikin IndustriesLtd (TSE:6367) Is Due To Pay A Dividend Of ¥120.00

Daikin Industries,Ltd. (TSE:6367) has announced that it will pay a dividend of ¥120.00 per share on the 1st of July. This means that the dividend yield is 1.2%, which is a bit low when comparing to other companies in the industry.

See our latest analysis for Daikin IndustriesLtd

Daikin IndustriesLtd's Earnings Easily Cover The Distributions

If it is predictable over a long period, even low dividend yields can be attractive. However, prior to this announcement, Daikin IndustriesLtd was quite comfortably covering its dividend with earnings and it was paying more than 75% of its free cash flow to shareholders. However, with more than 75% of free cash flow being paid out to shareholders, future growth could potentially be constrained.

Looking forward, earnings per share is forecast to rise by 35.5% over the next year. Assuming the dividend continues along recent trends, we think the payout ratio could be 24% by next year, which is in a pretty sustainable range.

Daikin IndustriesLtd 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. Since 2014, the annual payment back then was ¥36.00, compared to the most recent full-year payment of ¥260.00. This implies that the company grew its distributions at a yearly rate of about 22% over that duration. Rapidly growing dividends for a long time is a very valuable feature for an income stock.

We Could See Daikin IndustriesLtd's Dividend Growing

Investors could be attracted to the stock based on the quality of its payment history. Daikin IndustriesLtd has seen EPS rising for the last five years, at 5.6% per annum. Growth in EPS bodes well for the dividend, as does the low payout ratio that the company is currently reporting.

Our Thoughts On Daikin IndustriesLtd's Dividend

Overall, it's not great to see that the dividend has been cut, but this might be explained by the payments being a bit high previously. While Daikin IndustriesLtd is earning enough to cover the dividend, we are generally unimpressed with its future prospects. We don't think Daikin IndustriesLtd is a great stock to add to your portfolio if income is your focus.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Earnings growth generally bodes well for the future value of company dividend payments. See if the 16 Daikin IndustriesLtd analysts we track are forecasting continued growth with our free report on analyst estimates for the company. Is Daikin IndustriesLtd 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.