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. This payment means the dividend yield will be 1.4%, which is below the average for the industry.

See our latest analysis for Dai Nippon Printing

Dai Nippon Printing's Payment Has Solid Earnings Coverage

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. With the company not bringing in any cash, paying out to shareholders is bound to become difficult at some point.

Over the next year, EPS is forecast to fall by 30.4%. If the dividend continues along the path it has been on recently, we estimate the payout ratio could be 18%, which is comfortable for the company to continue in the future.

Dai Nippon Printing Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. The last annual payment of ¥64.00 was flat on the annual payment from10 years ago. Slow and steady dividend growth might not sound that exciting, but dividends have been stable for ten years, which we think makes this a fairly attractive offer.

The Dividend Looks Likely To Grow

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. We are encouraged to see that Dai Nippon Printing has grown earnings per share at 22% per year over the past five years. A low payout ratio gives the company a lot of flexibility, and growing earnings also make it very easy for it to grow the dividend.

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 Dai Nippon Printing is earning enough to cover the payments, the cash flows are lacking. We don't think Dai Nippon Printing is a great stock to add to your portfolio if income is your focus.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. However, there are other things to consider for investors when analysing stock performance. For example, we've identified 2 warning signs for Dai Nippon Printing (1 can't be ignored!) that you should be aware of before investing. 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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