GMO Financial Gate (TSE:4051) Has Announced That It Will Be Increasing Its Dividend To ¥80.00

GMO Financial Gate, Inc. (TSE:4051) has announced that it will be increasing its dividend from last year's comparable payment on the 17th of December to ¥80.00. Although the dividend is now higher, the yield is only 1.6%, which is below the industry average.

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GMO Financial Gate's Payment Could Potentially Have Solid Earnings Coverage

Even a low dividend yield can be attractive if it is sustained for years on end. However, prior to this announcement, GMO Financial Gate's dividend was comfortably covered by both cash flow and earnings. This means that most of what the business earns is being used to help it grow.

Over the next year, EPS is forecast to expand by 21.0%. Assuming the dividend continues along recent trends, we think the payout ratio could be 47% by next year, which is in a pretty sustainable range.

View our latest analysis for GMO Financial Gate

GMO Financial Gate Is Still Building Its Track Record

GMO Financial Gate's dividend has been pretty stable for a little while now, but we will continue to be cautious until it has been demonstrated for a few more years. Since 2020, the dividend has gone from ¥20.00 total annually to ¥80.00. This works out to be a compound annual growth rate (CAGR) of approximately 32% a year over that time. We're not overly excited about the relatively short history of dividend payments, however the dividend is growing at a nice rate and we might take a closer look.

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. We are encouraged to see that GMO Financial Gate has grown earnings per share at 35% per year over the past five years. A low payout ratio gives the company a lot of flexibility, and growing earnings also make it very easy for it to grow the dividend.

GMO Financial Gate Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that GMO Financial Gate is a strong income stock thanks to its track record and growing earnings. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All in all, this checks a lot of the boxes we look for when choosing an income stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. However, there are other things to consider for investors when analysing stock performance. For example, we've picked out 1 warning sign for GMO Financial Gate that investors should know about before committing capital to this stock. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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