Chofu Seisakusho (TSE:5946) Has Announced A Dividend Of ¥23.00

Chofu Seisakusho Co., Ltd. (TSE:5946) will pay a dividend of ¥23.00 on the 21st of August. This takes the annual payment to 1.8% of the current stock price, which is about average for the industry.

See our latest analysis for Chofu Seisakusho

Chofu Seisakusho's Payment Has Solid Earnings Coverage

We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue. Before making this announcement, Chofu Seisakusho was easily earning enough to cover the dividend. This means that most of its earnings are being retained to grow the business.

Looking forward, earnings per share could rise by 8.9% over the next year if the trend from the last few years continues. If the dividend continues along recent trends, we estimate the payout ratio will be 37%, which is in the range that makes us comfortable with the sustainability of the dividend.

Chofu Seisakusho Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2014, the annual payment back then was ¥30.00, compared to the most recent full-year payment of ¥40.00. This means that it has been growing its distributions at 2.9% per annum over that time. Although we can't deny that the dividend has been remarkably stable in the past, the growth has been pretty muted.

We Could See Chofu Seisakusho's Dividend Growing

The company's investors will be pleased to have been receiving dividend income for some time. It's encouraging to see that Chofu Seisakusho has been growing its earnings per share at 8.9% a year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for Chofu Seisakusho's prospects of growing its dividend payments in the future.

We Really Like Chofu Seisakusho's Dividend

Overall, a dividend increase is always good, and we think that Chofu Seisakusho is a strong income stock thanks to its track record and growing earnings. Earnings are easily covering distributions, and the company is generating plenty of cash. All of these factors considered, we think this has solid potential as a dividend stock.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. See if management have their own wealth at stake, by checking insider shareholdings in Chofu Seisakusho stock. Is Chofu Seisakusho not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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