Nishio Holdings (TSE:9699) Is Increasing Its Dividend To ¥113.00

Nishio Holdings Co., Ltd.'s (TSE:9699) dividend will be increasing from last year's payment of the same period to ¥113.00 on 23rd of December. This makes the dividend yield about the same as the industry average at 2.7%.

Check out our latest analysis for Nishio Holdings

Nishio Holdings' Earnings Easily Cover The Distributions

Unless the payments are sustainable, the dividend yield doesn't mean too much. Before making this announcement, Nishio Holdings 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.

The next year is set to see EPS grow by 11.2%. If the dividend continues on this path, the payout ratio could be 29% by next year, which we think can be pretty sustainable going forward.

Nishio Holdings Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2014, the dividend has gone from ¥30.00 total annually to ¥113.00. This implies that the company grew its distributions at a yearly rate of about 14% over that duration. We can see that payments have shown some very nice upward momentum without faltering, which provides some reassurance that future payments will also be reliable.

Nishio Holdings May Find It Hard To Grow The Dividend

Investors could be attracted to the stock based on the quality of its payment history. However, Nishio Holdings has only grown its earnings per share at 2.5% per annum over the past five years. While growth may be thin on the ground, Nishio Holdings could always pay out a higher proportion of earnings to increase shareholder returns.

We Really Like Nishio Holdings' Dividend

Overall, a dividend increase is always good, and we think that Nishio Holdings 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.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Are management backing themselves to deliver performance? Check their shareholdings in Nishio Holdings in our latest insider ownership analysis. 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.

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