Nisshin Seifun Group (TSE:2002) Is Due To Pay A Dividend Of ¥30.00

The board of Nisshin Seifun Group Inc. (TSE:2002) has announced that it will pay a dividend on the 8th of December, with investors receiving ¥30.00 per share. This will take the annual payment to 3.2% of the stock price, which is above what most companies in the industry pay.

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Nisshin Seifun Group's Future Dividend Projections Appear Well Covered By Earnings

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. Prior to this announcement, Nisshin Seifun Group's dividend was only 46% of earnings, however it was paying out 127% of free cash flows. The company might be more focused on returning cash to shareholders, but paying out this much of its cash flow could expose the dividend to being cut in the future.

Looking forward, earnings per share is forecast to rise by 6.7% over the next year. If the dividend continues on this path, the payout ratio could be 50% by next year, which we think can be pretty sustainable going forward.

View our latest analysis for Nisshin Seifun Group

Nisshin Seifun Group 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 2015, the dividend has gone from ¥18.18 total annually to ¥60.00. This means that it has been growing its distributions at 13% per annum over that time. We can see that payments have shown some very nice upward momentum without faltering, which provides some reassurance that future payments will also be reliable.

The Dividend Looks Likely To Grow

Investors could be attracted to the stock based on the quality of its payment history. Nisshin Seifun Group has seen EPS rising for the last five years, at 10% per annum. While on an earnings basis, this company looks appealing as an income stock, the cash payout ratio still makes us cautious.

Our Thoughts On Nisshin Seifun Group's Dividend

Overall, we always like to see the dividend being raised, but we don't think Nisshin Seifun Group will make a great income stock. With cash flows lacking, it is difficult to see how the company can sustain a dividend payment. This company is not in the top tier of income providing stocks.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. 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 Nisshin Seifun Group that you should be aware of before investing. Is Nisshin Seifun Group not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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