Soda Nikka's (TSE:8158) Dividend Will Be ¥16.00

Soda Nikka Co., Ltd. (TSE:8158) will pay a dividend of ¥16.00 on the 12th of December. Based on this payment, the dividend yield for the company will be 2.9%, which is fairly typical for the industry.

See our latest analysis for Soda Nikka

Soda Nikka's Earnings Easily Cover The Distributions

We aren't too impressed by dividend yields unless they can be sustained over time. But before making this announcement, Soda Nikka's earnings quite easily covered the dividend. The business is earning enough to make the dividend feasible, but the cash payout ratio of 82% shows that most of the cash is going back to the shareholders, which could constrain growth prospects going forward.

If the trend of the last few years continues, EPS will grow by 18.7% over the next 12 months. 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.

Soda Nikka Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2014, the dividend has gone from ¥13.00 total annually to ¥32.00. This means that it has been growing its distributions at 9.4% per annum over that time. Companies like this can be very valuable over the long term, if the decent rate of growth can be maintained.

The Dividend Looks Likely To Grow

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Soda Nikka has impressed us by growing EPS at 19% per year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for Soda Nikka's prospects of growing its dividend payments in the future.

Our Thoughts On Soda Nikka's Dividend

Overall, this is a reasonable dividend, and it being raised is an added bonus. However, lack of cash flows makes us wary of the potential for cuts in the dividend's future, even though the dividend is generally looking okay. Taking all of this into consideration, the dividend looks viable moving forward, but investors should be mindful that the company has pushed the boundaries of sustainability in the past and may do so again.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For example, we've picked out 1 warning sign for Soda Nikka that investors should know about before committing capital to this stock. Is Soda Nikka not quite the opportunity you were looking for? Why not check out our selection of top 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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