Idemitsu KosanLtd (TSE:5019) Will Pay A Dividend Of ¥16.00

Idemitsu Kosan Co.,Ltd. (TSE:5019) has announced that it will pay a dividend of ¥16.00 per share on the 3rd of June. This means that the annual payment will be 3.3% of the current stock price, which is in line with the average for the industry.

See our latest analysis for Idemitsu KosanLtd

Idemitsu KosanLtd's Payment Has Solid Earnings Coverage

We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue. Before making this announcement, Idemitsu KosanLtd 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.

EPS is set to fall by 24.8% over the next 12 months. Assuming the dividend continues along recent trends, we think the payout ratio could reach 81%, which is definitely on the higher side.

Idemitsu KosanLtd Has A Solid Track Record

The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. Since 2014, the annual payment back then was ¥10.00, compared to the most recent full-year payment of ¥32.00. This works out to be a compound annual growth rate (CAGR) of approximately 12% a year over that time. It is good to see that there has been strong dividend growth, and that there haven't been any cuts for a long time.

Idemitsu KosanLtd Could Grow Its Dividend

The company's investors will be pleased to have been receiving dividend income for some time. It's encouraging to see that Idemitsu KosanLtd has been growing its earnings per share at 8.7% a year over the past five years. Idemitsu KosanLtd definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

Idemitsu KosanLtd Looks Like A Great Dividend Stock

Overall, we like to see the dividend staying consistent, and we think Idemitsu KosanLtd might even raise payments in the future. The distributions are easily covered by earnings, and there is plenty of cash being generated as well. We should point out that the earnings are expected to fall over the next 12 months, which won't be a problem if this doesn't become a trend, but could cause some turbulence in the next year. 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. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For example, we've identified 2 warning signs for Idemitsu KosanLtd (1 is concerning!) that you should be aware of before investing. Is Idemitsu KosanLtd not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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