ITOCHU-SHOKUHIN's (TSE:2692) Dividend Will Be ¥50.00

ITOCHU-SHOKUHIN Co., Ltd. (TSE:2692) will pay a dividend of ¥50.00 on the 24th of June. This takes the annual payment to 1.3% of the current stock price, which is about average for the industry.

View our latest analysis for ITOCHU-SHOKUHIN

ITOCHU-SHOKUHIN's Earnings Easily Cover The Distributions

Unless the payments are sustainable, the dividend yield doesn't mean too much. Before making this announcement, ITOCHU-SHOKUHIN 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 10.7% 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 21% by next year, which we think can be pretty sustainable going forward.

ITOCHU-SHOKUHIN Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2014, the annual payment back then was ¥68.00, compared to the most recent full-year payment of ¥100.00. This works out to be a compound annual growth rate (CAGR) of approximately 3.9% a year over that time. Dividends have grown relatively slowly, which is not great, but some investors may value the relative consistency of the dividend.

The Dividend Looks Likely To Grow

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. It's encouraging to see that ITOCHU-SHOKUHIN has been growing its earnings per share at 11% a 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.

We Really Like ITOCHU-SHOKUHIN's Dividend

Overall, a dividend increase is always good, and we think that ITOCHU-SHOKUHIN is a strong income stock thanks to its track record and growing earnings. 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. 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. Now, if you want to look closer, it would be worth checking out our free research on ITOCHU-SHOKUHIN management tenure, salary, and performance. Is ITOCHU-SHOKUHIN 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.