Hikari Tsushin (TSE:9435) Will Pay A Dividend Of ¥161.00

Hikari Tsushin, Inc. (TSE:9435) has announced that it will pay a dividend of ¥161.00 per share on the 10th of March. This will take the annual payment to 1.9% of the stock price, which is above what most companies in the industry pay.

Check out our latest analysis for Hikari Tsushin

Hikari Tsushin's Future Dividend Projections Appear Well Covered By Earnings

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. However, Hikari Tsushin's earnings easily 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 is forecast to expand by 2.3%. If the dividend continues on this path, the payout ratio could be 30% by next year, which we think can be pretty sustainable going forward.

Hikari Tsushin Has A Solid Track Record

The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. Since 2014, the annual payment back then was ¥140.00, compared to the most recent full-year payment of ¥644.00. This works out to be a compound annual growth rate (CAGR) of approximately 16% a year over that time. 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 Hikari Tsushin has been growing its earnings per share at 13% a year over the past five years. Hikari Tsushin definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

Hikari Tsushin Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that Hikari Tsushin 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 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. Taking the debate a bit further, we've identified 1 warning sign for Hikari Tsushin that investors need to be conscious of moving forward. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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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.