Suzumo Machinery (TSE:6405) Has Announced A Dividend Of ¥15.00

The board of Suzumo Machinery Company Limited (TSE:6405) has announced that it will pay a dividend on the 12th of December, with investors receiving ¥15.00 per share. This payment means that the dividend yield will be 2.3%, which is around the industry average.

View our latest analysis for Suzumo Machinery

Suzumo Machinery's Payment Has Solid Earnings Coverage

Solid dividend yields are great, but they only really help us if the payment is sustainable. However, prior to this announcement, Suzumo Machinery's dividend was comfortably covered by both cash flow and earnings. As a result, a large proportion of what it earned was being reinvested back into the business.

The next year is set to see EPS grow by 22.3%. Assuming the dividend continues along recent trends, we think the payout ratio could be 29% by next year, which is in a pretty sustainable range.

Suzumo Machinery Has A Solid Track Record

The company has an extended history of paying stable dividends. The annual payment during the last 10 years was ¥7.50 in 2014, and the most recent fiscal year payment was ¥33.00. This implies that the company grew its distributions at a yearly rate of about 16% over that duration. Rapidly growing dividends for a long time is a very valuable feature for an income stock.

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 Suzumo Machinery has been growing its earnings per share at 33% a year over the past five years. Earnings have been growing rapidly, and with a low payout ratio we think that the company could turn out to be a great dividend stock.

Suzumo Machinery Looks Like A Great Dividend Stock

Overall, we think that this is a great income investment, and we think that maintaining the dividend this year may have been a conservative choice. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All in all, this checks a lot of the boxes we look for when choosing an income stock.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. See if management have their own wealth at stake, by checking insider shareholdings in Suzumo Machinery stock. Is Suzumo Machinery not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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