Stock Analysis

Kanematsu (TSE:8020) Is Due To Pay A Dividend Of ¥52.50

TSE:8020
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Kanematsu Corporation (TSE:8020) has announced that it will pay a dividend of ¥52.50 per share on the 11th of June. This will take the dividend yield to an attractive 4.0%, providing a nice boost to shareholder returns.

Check out our latest analysis for Kanematsu

Kanematsu's Future Dividend Projections Appear Well Covered By Earnings

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. However, Kanematsu's earnings easily cover the dividend. 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 9.3%. Assuming the dividend continues along recent trends, we think the payout ratio could be 35% by next year, which is in a pretty sustainable range.

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TSE:8020 Historic Dividend January 8th 2025

Dividend Volatility

Although the company has a long dividend history, it has been cut at least once in the last 10 years. The annual payment during the last 10 years was ¥15.00 in 2015, and the most recent fiscal year payment was ¥105.00. This implies that the company grew its distributions at a yearly rate of about 21% over that duration. It is great to see strong growth in the dividend payments, but cuts are concerning as it may indicate the payout policy is too ambitious.

We Could See Kanematsu's Dividend Growing

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. Kanematsu has impressed us by growing EPS at 9.7% per year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for Kanematsu's prospects of growing its dividend payments in the future.

Kanematsu Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that Kanematsu is a strong income stock thanks to its track record and growing earnings. Distributions are quite easily covered by earnings, which are also being converted to cash flows. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For instance, we've picked out 2 warning signs for Kanematsu that investors should take into consideration. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

Valuation is complex, but we're here to simplify it.

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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.