Chofu Seisakusho's (TSE:5946) Dividend Will Be ¥23.00

Chofu Seisakusho Co., Ltd. (TSE:5946) has announced that it will pay a dividend of ¥23.00 per share on the 21st of August. The payment will take the dividend yield to 1.8%, which is in line with the average for the industry.

View our latest analysis for Chofu Seisakusho

Chofu Seisakusho's Earnings Easily Cover The Distributions

We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue. However, prior to this announcement, Chofu Seisakusho's dividend was comfortably covered by both cash flow and earnings. As a result, a large proportion of what it earned was being reinvested back into 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 on this path, the payout ratio could be 37% by next year, which we think can be pretty sustainable going forward.

Chofu Seisakusho Has A Solid Track Record

The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. The dividend has gone from an annual total of ¥30.00 in 2014 to the most recent total annual payment of ¥40.00. This works out to be a compound annual growth rate (CAGR) of approximately 2.9% a year 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

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Chofu Seisakusho has seen EPS rising for the last five years, at 8.9% per annum. Chofu Seisakusho definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

Chofu Seisakusho Looks Like A Great Dividend Stock

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. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Are management backing themselves to deliver performance? Check their shareholdings in Chofu Seisakusho in our latest insider ownership analysis. 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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