Inaba Denki SangyoLtd (TSE:9934) Will Pay A Dividend Of ¥70.00

The board of Inaba Denki Sangyo Co.,Ltd. (TSE:9934) has announced that it will pay a dividend of ¥70.00 per share on the 24th of June. This means the annual payment is 3.8% of the current stock price, which is above the average for the industry.

See our latest analysis for Inaba Denki SangyoLtd

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

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. The last dividend was quite easily covered by Inaba Denki SangyoLtd's earnings. This indicates that a lot of the earnings are being reinvested into the business, with the aim of fueling growth.

Looking forward, earnings per share could rise by 9.1% over the next year if the trend from the last few years continues. Assuming the dividend continues along recent trends, we think the payout ratio could be 43% by next year, which is in a pretty sustainable range.

Dividend Volatility

Although the company has a long dividend history, it has been cut at least once in the last 10 years. The dividend has gone from an annual total of ¥56.50 in 2015 to the most recent total annual payment of ¥140.00. This implies that the company grew its distributions at a yearly rate of about 9.5% over that duration. It's good to see the dividend growing at a decent rate, but the dividend has been cut at least once in the past. Inaba Denki SangyoLtd might have put its house in order since then, but we remain cautious.

Inaba Denki SangyoLtd Could Grow Its Dividend

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. Earnings are on the uptrend, and it is only paying a small portion of those earnings to shareholders.

We Really Like Inaba Denki SangyoLtd's Dividend

In summary, it is good to see that the dividend is staying consistent, and we don't think there is any reason to suspect this might change over the medium term. 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.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. However, there are other things to consider for investors when analysing stock performance. As an example, we've identified 1 warning sign for Inaba Denki SangyoLtd that you should be aware of before investing. 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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