NISSO HOLDINGS' (TSE:9332) Shareholders Will Receive A Bigger Dividend Than Last Year

NISSO HOLDINGS Co., Ltd (TSE:9332) has announced that it will be increasing its dividend from last year's comparable payment on the 26th of June to ¥25.00. This makes the dividend yield 3.8%, which is above the industry average.

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NISSO HOLDINGS' Projected Earnings Seem Likely To Cover Future Distributions

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. The last dividend was quite easily covered by NISSO HOLDINGS' earnings. This means that a large portion of its earnings are being retained to grow the business.

The next year is set to see EPS grow by 16.8%. If the dividend continues on this path, the payout ratio could be 48% by next year, which we think can be pretty sustainable going forward.

View our latest analysis for NISSO HOLDINGS

NISSO HOLDINGS Doesn't Have A Long Payment History

NISSO HOLDINGS' dividend has been pretty stable for a little while now, but we will continue to be cautious until it has been demonstrated for a few more years. The annual payment during the last 8 years was ¥10.50 in 2017, and the most recent fiscal year payment was ¥25.00. This works out to be a compound annual growth rate (CAGR) of approximately 11% a year over that time. NISSO HOLDINGS has been growing its dividend quite rapidly, which is exciting. However, the short payment history makes us question whether this performance will persist across a full market cycle.

NISSO HOLDINGS May Find It Hard To Grow The Dividend

The company's investors will be pleased to have been receiving dividend income for some time. However, things aren't all that rosy. Over the past five years, it looks as though NISSO HOLDINGS' EPS has declined at around 3.1% a year. If the company is making less over time, it naturally follows that it will also have to pay out less in dividends. Earnings are forecast to grow over the next 12 months and if that happens we could still be a little bit cautious until it becomes a pattern.

Our Thoughts On NISSO HOLDINGS' Dividend

Overall, we always like to see the dividend being raised, but we don't think NISSO HOLDINGS will make a great income stock. The payments haven't been particularly stable and we don't see huge growth potential, but with the dividend well covered by cash flows it could prove to be reliable over the short term. We don't think NISSO HOLDINGS 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 instance, we've picked out 1 warning sign for NISSO HOLDINGS that investors should take into consideration. Is NISSO HOLDINGS 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.