Daikin IndustriesLtd's (TSE:6367) Dividend Will Be ¥120.00

The board of Daikin Industries,Ltd. (TSE:6367) has announced that it will pay a dividend of ¥120.00 per share on the 1st of July. This payment takes the dividend yield to 1.3%, which only provides a modest boost to overall returns.

Check out our latest analysis for Daikin IndustriesLtd

Daikin IndustriesLtd's Dividend Is Well Covered By Earnings

It would be nice for the yield to be higher, but we should also check if higher levels of dividend payment would be sustainable. But before making this announcement, Daikin IndustriesLtd's earnings quite easily covered the dividend. The business is earning enough to make the dividend feasible, but the cash payout ratio of 90% shows that most of the cash is going back to the shareholders, which could constrain growth prospects going forward.

Looking forward, earnings per share is forecast to rise by 34.2% 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 an extended history of paying stable dividends. The dividend has gone from an annual total of ¥36.00 in 2014 to the most recent total annual payment of ¥260.00. This means that it has been growing its distributions at 22% 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.

We Could See Daikin IndustriesLtd's Dividend Growing

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. It's encouraging to see that Daikin IndustriesLtd has been growing its earnings per share at 5.6% a year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for Daikin IndustriesLtd's prospects of growing its dividend payments in the future.

In Summary

In summary, dividends being cut isn't ideal, however it can bring the payment into a more sustainable range. While Daikin IndustriesLtd is earning enough to cover the dividend, we are generally unimpressed with its future prospects. We would be a touch cautious of relying on this stock primarily for the dividend income.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. However, there are other things to consider for investors when analysing stock performance. Earnings growth generally bodes well for the future value of company dividend payments. See if the 15 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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