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

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 dividend yield to an attractive 3.2%, providing a nice boost to shareholder returns.

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NIPPON PARKING DEVELOPMENTLtd's Future Dividend Projections Appear Well Covered By Earnings

Impressive dividend yields are good, but this doesn't matter much if the payments 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.

If the trend of the last few years continues, EPS will grow by 21.6% over the next 12 months. Assuming the dividend continues along recent trends, we think the payout ratio could be 42% by next year, which is in a pretty sustainable range.

See our latest analysis for NIPPON PARKING DEVELOPMENTLtd

NIPPON PARKING DEVELOPMENTLtd Has A Solid Track Record

The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. The annual payment during the last 10 years was ¥3.00 in 2015, and the most recent fiscal year payment was ¥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. NIPPON PARKING DEVELOPMENTLtd has impressed us by growing EPS at 22% per 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

Overall, this is probably not a great income stock, even though the dividend is being raised at the moment. While the low payout ratio is a redeeming feature, this is offset by the minimal cash to cover the payments. We would be a touch cautious of relying on this stock primarily for the dividend income.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular 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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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.