Zojirushi (TSE:7965) Has Announced A Dividend Of ¥17.00

The board of Zojirushi Corporation (TSE:7965) has announced that it will pay a dividend on the 19th of February, with investors receiving ¥17.00 per share. This makes the dividend yield 2.3%, which will augment investor returns quite nicely.

View our latest analysis for Zojirushi

Zojirushi's Earnings Easily Cover The Distributions

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. Before making this announcement, Zojirushi was easily earning enough to cover the dividend. As a result, a large proportion of what it earned was being reinvested back into the business.

Looking forward, earnings per share is forecast to rise by 1.1% over the next year. Assuming the dividend continues along recent trends, we think the payout ratio could be 44% by next year, which is in a pretty sustainable range.

Dividend Volatility

The company has a long dividend track record, but it doesn't look great with cuts in the past. The annual payment during the last 10 years was ¥8.00 in 2014, and the most recent fiscal year payment was ¥34.00. This means that it has been growing its distributions at 16% per annum over that time. Despite the rapid growth in the dividend over the past number of years, we have seen the payments go down the past as well, so that makes us cautious.

Zojirushi Could Grow Its Dividend

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. Zojirushi has impressed us by growing EPS at 9.6% per year over the past five years. A low payout ratio and decent growth suggests that the company is reinvesting well, and it also has plenty of room to increase the dividend over time.

Zojirushi Looks Like A Great Dividend Stock

Overall, we like to see the dividend staying consistent, and we think Zojirushi might even raise payments in the future. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For example, we've picked out 2 warning signs for Zojirushi that investors should know about before committing capital to this stock. Is Zojirushi not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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