Nichiban's (TSE:4218) Upcoming Dividend Will Be Larger Than Last Year's

Nichiban Co., Ltd. (TSE:4218) has announced that it will be increasing its dividend from last year's comparable payment on the 29th of June to ¥40.00. This takes the annual payment to 2.0% of the current stock price, which is about average for the industry.

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Nichiban's Projected Earnings Seem Likely To Cover Future Distributions

We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue. However, Nichiban's earnings easily cover the dividend. This means that most of what the business earns is being used to help it grow.

Over the next year, EPS is forecast to expand by 14.6%. Assuming the dividend continues along recent trends, we think the payout ratio could be 37% by next year, which is in a pretty sustainable range.

See our latest analysis for Nichiban

Nichiban 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 dividend has gone from an annual total of ¥16.00 in 2015 to the most recent total annual payment of ¥40.00. This implies that the company grew its distributions at a yearly rate of about 9.6% over that duration. The dividend has been growing very nicely for a number of years, and has given its shareholders some nice income in their portfolios.

We Could See Nichiban's Dividend Growing

Investors could be attracted to the stock based on the quality of its payment history. We are encouraged to see that Nichiban has grown earnings per share at 5.1% per year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for Nichiban's prospects of growing its dividend payments in the future.

We Really Like Nichiban's Dividend

Overall, a dividend increase is always good, and we think that Nichiban is a strong income stock thanks to its track record and growing earnings. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All of these factors considered, we think this has solid potential as a dividend 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. Are management backing themselves to deliver performance? Check their shareholdings in Nichiban in our latest insider ownership analysis. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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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.