Dai Nippon Printing (TSE:7912) Has Affirmed Its Dividend Of ¥32.00

The board of Dai Nippon Printing Co., Ltd. (TSE:7912) has announced that it will pay a dividend on the 1st of July, with investors receiving ¥32.00 per share. Including this payment, the dividend yield on the stock will be 1.5%, which is a modest boost for shareholders' returns.

View our latest analysis for Dai Nippon Printing

Dai Nippon Printing's Dividend Is Well Covered By Earnings

The dividend yield is a little bit low, but sustainability of the payments is also an important part of evaluating an income stock. Based on the last payment, Dai Nippon Printing was earning enough to cover the dividend, but free cash flows weren't positive. We think that cash flows should take priority over earnings, so this is definitely a worry for the dividend going forward.

EPS is set to fall by 30.4% over the next 12 months. If the dividend continues along the path it has been on recently, we estimate the payout ratio could be 19%, which is comfortable for the company to continue in the future.

Dai Nippon Printing Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. The payments haven't really changed that much since 10 years ago. Dividends have grown relatively slowly, which is not great, but some investors may value the relative consistency of the dividend.

The Dividend Looks Likely To Grow

The company's investors will be pleased to have been receiving dividend income for some time. We are encouraged to see that Dai Nippon Printing has grown earnings per share 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 Dai Nippon Printing's Dividend

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Dai Nippon Printing's payments, as there could be some issues with sustaining them into the future. While the low payout ratio is a redeeming feature, this is offset by the minimal cash to cover the payments. We don't think Dai Nippon Printing is a great stock to add to your portfolio if income is your focus.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Case in point: We've spotted 2 warning signs for Dai Nippon Printing (of which 1 is concerning!) you should know about. Is Dai Nippon Printing not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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