Japan Wool Textile's (TSE:3201) Upcoming Dividend Will Be Larger Than Last Year's

The Japan Wool Textile Co., Ltd. (TSE:3201) will increase its dividend from last year's comparable payment on the 26th of February to ¥20.00. This makes the dividend yield 2.4%, which is above the industry average.

See our latest analysis for Japan Wool Textile

Japan Wool Textile's Payment Has Solid Earnings Coverage

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. However, Japan Wool Textile's earnings easily cover the dividend. As a result, a large proportion of what it earned was being reinvested back into the business.

If the trend of the last few years continues, EPS will grow by 9.5% over the next 12 months. Assuming the dividend continues along recent trends, we think the payout ratio could be 30% by next year, which is in a pretty sustainable range.

Japan Wool Textile Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. The dividend has gone from an annual total of ¥18.00 in 2014 to the most recent total annual payment of ¥33.00. This works out to be a compound annual growth rate (CAGR) of approximately 6.2% a year over that time. The growth of the dividend has been pretty reliable, so we think this can offer investors some nice additional income in their portfolio.

The Dividend Has Growth Potential

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Japan Wool Textile has impressed us by growing EPS at 9.5% per year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for Japan Wool Textile's prospects of growing its dividend payments in the future.

We Really Like Japan Wool Textile's Dividend

Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All in all, this checks a lot of the boxes we look for when choosing an income stock.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Are management backing themselves to deliver performance? Check their shareholdings in Japan Wool Textile in our latest insider ownership analysis. 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.

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