Inaba Denki SangyoLtd (TSE:9934) Has Affirmed Its Dividend Of ¥70.00

The board of Inaba Denki Sangyo Co.,Ltd. (TSE:9934) has announced that it will pay a dividend on the 24th of June, with investors receiving ¥70.00 per share. Based on this payment, the dividend yield on the company's stock will be 3.6%, which is an attractive boost to shareholder returns.

See our latest analysis for Inaba Denki SangyoLtd

Inaba Denki SangyoLtd's Payment Could Potentially Have Solid Earnings Coverage

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. However, Inaba Denki SangyoLtd's earnings easily cover the dividend. This means that most of its earnings are being retained to grow the business.

If the trend of the last few years continues, EPS will grow by 9.1% over the next 12 months. If the dividend continues along recent trends, we estimate the payout ratio will be 43%, which is in the range that makes us comfortable with the sustainability of the dividend.

Dividend Volatility

While the company has been paying a dividend for a long time, it has cut the dividend at least once in the last 10 years. Since 2014, the annual payment back then was ¥56.50, compared to the most recent full-year payment of ¥140.00. This works out to be a compound annual growth rate (CAGR) of approximately 9.5% a year over that time. We have seen cuts in the past, so while the growth looks promising we would be a little bit cautious about its track record.

The Dividend Has Growth Potential

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. Inaba Denki SangyoLtd has impressed us by growing EPS at 9.1% per year over the past five years. Inaba Denki SangyoLtd definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

We Really Like Inaba Denki SangyoLtd's Dividend

Overall, we like to see the dividend staying consistent, and we think Inaba Denki SangyoLtd might even raise payments in the future. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All in all, this checks a lot of the boxes we look for when choosing an income stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Taking the debate a bit further, we've identified 1 warning sign for Inaba Denki SangyoLtd that investors need to be conscious of moving forward. Is Inaba Denki SangyoLtd 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.