Kyokuyo (TSE:1301) Has Affirmed Its Dividend Of ¥100.00

The board of Kyokuyo Co., Ltd. (TSE:1301) has announced that it will pay a dividend on the 28th of June, with investors receiving ¥100.00 per share. Based on this payment, the dividend yield on the company's stock will be 2.3%, which is an attractive boost to shareholder returns.

See our latest analysis for Kyokuyo

Kyokuyo's Payment Has Solid Earnings Coverage

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. However, prior to this announcement, Kyokuyo's dividend was comfortably covered by both cash flow and earnings. This means that most of its earnings are being retained to grow the business.

If the trend of the last few years continues, EPS will grow by 8.6% over the next 12 months. If the dividend continues along recent trends, we estimate the payout ratio will be 24%, which is in the range that makes us comfortable with the sustainability of the dividend.

Kyokuyo Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2014, the annual payment back then was ¥50.00, compared to the most recent full-year payment of ¥90.00. This means that it has been growing its distributions at 6.1% per annum over that time. Dividends have grown at a reasonable rate over this period, and without any major cuts in the payment over time, we think this is an attractive combination as it provides a nice boost to shareholder returns.

Kyokuyo Could Grow Its Dividend

The company's investors will be pleased to have been receiving dividend income for some time. Kyokuyo has impressed us by growing EPS at 8.6% per year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for Kyokuyo's prospects of growing its dividend payments in the future.

Kyokuyo Looks Like A Great Dividend Stock

In summary, it is good to see that the dividend is staying consistent, and we don't think there is any reason to suspect this might change over the medium term. 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.

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. Just as an example, we've come across 2 warning signs for Kyokuyo you should be aware of, and 1 of them is a bit unpleasant. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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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.