Nagaoka International (TSE:6239) Will Pay A Larger Dividend Than Last Year At ¥35.00

Nagaoka International Corporation (TSE:6239) has announced that it will be increasing its dividend from last year's comparable payment on the 29th of September to ¥35.00. Based on this payment, the dividend yield for the company will be 2.7%, which is fairly typical for the industry.

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Nagaoka International's Payment Could Potentially Have Solid Earnings Coverage

We aren't too impressed by dividend yields unless they can be sustained over time. Before making this announcement, Nagaoka International was easily earning enough to cover the dividend. This means that most of what the business earns is being used to help it grow.

If the trend of the last few years continues, EPS will grow by 8.2% over the next 12 months. If the dividend continues on this path, the payout ratio could be 27% by next year, which we think can be pretty sustainable going forward.

See our latest analysis for Nagaoka International

Nagaoka International Doesn't Have A Long Payment History

The dividend's track record has been pretty solid, but with only 5 years of history we want to see a few more years of history before making any solid conclusions. The annual payment during the last 5 years was ¥7.00 in 2020, and the most recent fiscal year payment was ¥35.00. This works out to be a compound annual growth rate (CAGR) of approximately 38% 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.

Nagaoka International Could Grow Its Dividend

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 Nagaoka International has grown earnings per share at 8.2% per year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for Nagaoka International's prospects of growing its dividend payments in the future.

Nagaoka International Looks Like A Great Dividend Stock

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All of these factors considered, we think this has solid potential as a dividend stock.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. However, there are other things to consider for investors when analysing stock performance. Taking the debate a bit further, we've identified 1 warning sign for Nagaoka International that investors need to be conscious of moving forward. Is Nagaoka International not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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