Seiko Electric Co., Ltd.'s (TSE:6653) investors are due to receive a payment of ¥20.00 per share on 12th of March. This will take the dividend yield to an attractive 3.1%, providing a nice boost to shareholder returns.
View our latest analysis for Seiko Electric
Seiko Electric's Earnings Easily Cover The Distributions
A big dividend yield for a few years doesn't mean much if it can't be sustained. Before making this announcement, Seiko Electric 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.
Over the next year, EPS could expand by 16.8% if recent trends continue. If the dividend continues along recent trends, we estimate the payout ratio will be 33%, which is in the range that makes us comfortable with the sustainability of the dividend.
Seiko Electric Has A Solid Track Record
The company has an extended history of paying stable dividends. Since 2014, the dividend has gone from ¥10.00 total annually to ¥40.00. This means that it has been growing its distributions at 15% per annum over that time. It is good to see that there has been strong dividend growth, and that there haven't been any cuts for a long time.
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 Seiko Electric has been growing its earnings per share at 17% a year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for Seiko Electric's prospects of growing its dividend payments in the future.
We Really Like Seiko Electric's Dividend
Overall, a dividend increase is always good, and we think that Seiko Electric is a strong income stock thanks to its track record and growing earnings. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. 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. However, there are other things to consider for investors when analysing stock performance. See if management have their own wealth at stake, by checking insider shareholdings in Seiko Electric stock. 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.
About TSE:6653
Seiko Electric
Primarily operates in the fields of power system, and environmental energy and control system in Japan.
Solid track record with excellent balance sheet and pays a dividend.
