Nihon M&A Center Holdings (TSE:2127) Is Increasing Its Dividend To ¥14.00

The board of Nihon M&A Center Holdings Inc. (TSE:2127) has announced that the dividend on 5th of December will be increased to ¥14.00, which will be 27% higher than last year's payment of ¥11.00 which covered the same period. This makes the dividend yield 3.4%, which is above the industry average.

Check out our latest analysis for Nihon M&A Center Holdings

Nihon M&A Center Holdings' Future Dividend Projections Appear Well Covered By Earnings

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. The last dividend was quite easily covered by Nihon M&A Center Holdings' earnings. This indicates that quite a large proportion of earnings is being invested back into the business.

EPS is set to grow by 10.0% over the next year. Assuming the dividend continues along recent trends, our estimates say the payout ratio could reach 82% - on the higher side, but we wouldn't necessarily say this is unsustainable.

Nihon M&A Center Holdings Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2014, the dividend has gone from ¥2.50 total annually to ¥23.00. This implies that the company grew its distributions at a yearly rate of about 25% over that duration. We can see that payments have shown some very nice upward momentum without faltering, which provides some reassurance that future payments will also be reliable.

The Dividend's Growth Prospects Are Limited

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Earnings per share has been crawling upwards at 2.6% per year. Growth of 2.6% may indicate that the company has limited investment opportunity so it is returning its earnings to shareholders instead. This isn't necessarily bad, but we wouldn't expect rapid dividend growth in the future.

Nihon M&A Center Holdings Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that Nihon M&A Center Holdings 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. However, there are other things to consider for investors when analysing stock performance. Earnings growth generally bodes well for the future value of company dividend payments. See if the 7 Nihon M&A Center Holdings analysts we track are forecasting continued growth with our free report on analyst estimates for the company. If you are a dividend investor, you might also want to look at our curated list of high yield 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.