Daikin IndustriesLtd's (TSE:6367) Shareholders Will Receive A Bigger Dividend Than Last Year

The board of Daikin Industries,Ltd. (TSE:6367) has announced that it will be paying its dividend of ¥185.00 on the 4th of December, an increased payment from last year's comparable dividend. Even though the dividend went up, the yield is still quite low at only 1.5%.

View our latest analysis for Daikin IndustriesLtd

Daikin IndustriesLtd's Dividend Is Well Covered By Earnings

Even a low dividend yield can be attractive if it is sustained for years on end. Before making this announcement, Daikin IndustriesLtd was easily earning enough to cover the dividend. This means that most of its earnings are being retained to grow the business.

Looking forward, earnings per share is forecast to rise by 8.0% over the next year. If the dividend continues on this path, the payout ratio could be 37% by next year, which we think can be pretty sustainable going forward.

Daikin IndustriesLtd Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2014, the annual payment back then was ¥46.00, compared to the most recent full-year payment of ¥320.00. This means that it has been growing its distributions at 21% per annum over that time. 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.

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. We are encouraged to see that Daikin IndustriesLtd has grown earnings per share at 6.6% per 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.

We Really Like Daikin IndustriesLtd's Dividend

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

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Earnings growth generally bodes well for the future value of company dividend payments. See if the 17 Daikin IndustriesLtd analysts we track are forecasting continued growth with our free report on analyst estimates for the company. If you are a dividend investor, you might also want to look at our curated list of high yield 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.

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