NIPPON PARKING DEVELOPMENTLtd's (TSE:2353) Upcoming Dividend Will Be Larger Than Last Year's

NIPPON PARKING DEVELOPMENT Co.,Ltd.'s (TSE:2353) dividend will be increasing from last year's payment of the same period to ¥8.00 on 27th of October. This makes the dividend yield 3.0%, which is above the industry average.

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NIPPON PARKING DEVELOPMENTLtd'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. Based on the last payment, NIPPON PARKING DEVELOPMENTLtd was paying only paying out a fraction of earnings, but the payment was a massive 113% of 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.

Over the next year, EPS could expand by 21.6% if recent trends continue. If the dividend continues along recent trends, we estimate the payout ratio will be 42%, which is in the range that makes us comfortable with the sustainability of the dividend.

Check out our latest analysis for NIPPON PARKING DEVELOPMENTLtd

NIPPON PARKING DEVELOPMENTLtd Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. Since 2015, the annual payment back then was ¥3.00, compared to the most recent full-year payment of ¥8.00. This works out to be a compound annual growth rate (CAGR) of approximately 10% 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

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. Rapid earnings growth and a low payout ratio suggest this company has been effectively reinvesting in its business. Should that continue, this company could have a bright future.

Our Thoughts On NIPPON PARKING DEVELOPMENTLtd's Dividend

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. With cash flows lacking, it is difficult to see how the company can sustain a dividend payment. This company is not in the top tier of income providing stocks.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Taking the debate a bit further, we've identified 1 warning sign for NIPPON PARKING DEVELOPMENTLtd that investors need to be conscious of moving forward. 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.