The board of The Japan Wool Textile Co., Ltd. (TSE:3201) has announced that it will pay a dividend on the 19th of August, with investors receiving ¥16.00 per share. This will take the annual payment to 2.4% of the stock price, which is above what most companies in the industry pay.
See our latest analysis for Japan Wool Textile
Japan Wool Textile's Payment Has Solid Earnings Coverage
Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. However, prior to this announcement, Japan Wool Textile's dividend was comfortably covered by both cash flow and earnings. This means that most of what the business earns is being used to help it grow.
Over the next year, EPS could expand by 8.4% if recent trends continue. If the dividend continues along recent trends, we estimate the payout ratio will be 31%, which is in the range that makes us comfortable with the sustainability of the dividend.
Japan Wool Textile Has A Solid Track Record
The company has a sustained record of paying dividends with very little fluctuation. Since 2014, the dividend has gone from ¥18.00 total annually to ¥33.00. This works out to be a compound annual growth rate (CAGR) of approximately 6.2% a year over that time. Dividends have grown at a reasonable rate over this period, and without any major cuts in the payment over time, we think this is an attractive combination as it provides a nice boost to shareholder returns.
Japan Wool Textile Could Grow Its Dividend
The company's investors will be pleased to have been receiving dividend income for some time. Japan Wool Textile has seen EPS rising for the last five years, at 8.4% per annum. Growth in EPS bodes well for the dividend, as does the low payout ratio that the company is currently reporting.
Japan Wool Textile Looks Like A Great Dividend Stock
In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. Earnings are easily covering distributions, and the company is generating plenty of cash. Taking this all into consideration, this looks like it could be a good dividend opportunity.
It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. However, there are other things to consider for investors when analysing stock performance. You can also discover whether shareholders are aligned with insider interests by checking our visualisation of insider shareholdings and trades in Japan Wool Textile stock. Is Japan Wool Textile 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.
About TSE:3201
Flawless balance sheet with solid track record and pays a dividend.
