GMO Financial Gate's (TSE:4051) Upcoming Dividend Will Be Larger Than Last Year's

GMO Financial Gate, Inc.'s (TSE:4051) dividend will be increasing from last year's payment of the same period to ¥80.00 on 17th of December. Despite this raise, the dividend yield of 1.7% is only a modest boost to shareholder returns.

We've discovered 1 warning sign about GMO Financial Gate. View them for free.

GMO Financial Gate's Projected Earnings Seem Likely To Cover Future Distributions

Even a low dividend yield can be attractive if it is sustained for years on end. Based on the last payment, GMO Financial Gate was quite comfortably earning enough to cover the dividend. This indicates that quite a large proportion of earnings is being invested back into the business.

The next year is set to see EPS grow by 21.5%. If the dividend continues along recent trends, we estimate the payout ratio will be 55%, which is in the range that makes us comfortable with the sustainability of the dividend.

See our latest analysis for GMO Financial Gate

GMO Financial Gate Doesn't Have A Long Payment History

Looking back, the dividend has been stable, but the company hasn't been paying a dividend for very long so we can't be confident that the dividend will remain stable through all economic environments. The dividend has gone from an annual total of ¥20.00 in 2021 to the most recent total annual payment of ¥80.00. This works out to be a compound annual growth rate (CAGR) of approximately 41% a year over that time. GMO Financial Gate has been growing its dividend quite rapidly, which is exciting. However, the short payment history makes us question whether this performance will persist across a full market cycle.

The Dividend Looks Likely To Grow

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. We are encouraged to see that GMO Financial Gate has grown earnings per share at 53% per year over the past five years. GMO Financial Gate is clearly able to grow rapidly while still returning cash to shareholders, positioning it to become a strong dividend payer in the future.

We Really Like GMO Financial Gate's Dividend

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. Earnings are easily covering distributions, and the company is generating plenty of cash. All in all, this checks a lot of the boxes we look for when choosing an income stock.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. As an example, we've identified 1 warning sign for GMO Financial Gate that you should be aware of before investing. Is GMO Financial Gate 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.