NIPPON PARKING DEVELOPMENTLtd (TSE:2353) Is Increasing Its Dividend To ¥8.00

NIPPON PARKING DEVELOPMENT Co.,Ltd. (TSE:2353) has announced that it will be increasing its dividend from last year's comparable payment on the 27th of October to ¥8.00. This will take the annual payment to 3.1% of the stock price, which is above what most companies in the industry pay.

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NIPPON PARKING DEVELOPMENTLtd's Payment Could Potentially Have Solid Earnings Coverage

A big dividend yield for a few years doesn't mean much if it can't be sustained. Prior to this announcement, NIPPON PARKING DEVELOPMENTLtd's dividend was only 33% of earnings, however it was paying out 113% of free cash flows. A cash payout ratio this high could put the dividend under pressure and force the company to reduce it in the future if it were to run into tough times.

Looking forward, earnings per share could rise by 21.6% over the next year if the trend from the last few years continues. If the dividend continues on this path, the payout ratio could be 42% by next year, which we think can be pretty sustainable going forward.

View our latest analysis for NIPPON PARKING DEVELOPMENTLtd

NIPPON PARKING DEVELOPMENTLtd Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. Since 2015, the dividend has gone from ¥3.00 total annually to ¥8.00. This means that it has been growing its distributions at 10% per annum over that time. 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.

The Dividend Looks Likely To Grow

Investors could be attracted to the stock based on the quality of its payment history. It's encouraging to see that NIPPON PARKING DEVELOPMENTLtd has been growing its earnings per share at 22% a year over the past five years. Earnings have been growing rapidly, and with a low payout ratio we think that the company could turn out to be a great dividend stock.

In Summary

In summary, while it's always good to see the dividend being raised, we don't think NIPPON PARKING DEVELOPMENTLtd's payments are rock solid. While NIPPON PARKING DEVELOPMENTLtd is earning enough to cover the payments, the cash flows are lacking. We would be a touch cautious of relying on this stock primarily for the dividend income.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For example, we've picked out 1 warning sign for NIPPON PARKING DEVELOPMENTLtd that investors should know about before committing capital to this stock. Is NIPPON PARKING DEVELOPMENTLtd not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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