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

Nisshin Seifun Group Inc. (TSE:2002) has announced that it will pay a dividend of ¥30.00 per share on the 8th of December. This takes the dividend yield to 3.3%, which shareholders will be pleased with.

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Nisshin Seifun Group's Payment Could Potentially Have Solid Earnings Coverage

If the payments aren't sustainable, a high yield for a few years won't matter that much. Based on the last dividend, Nisshin Seifun Group is earning enough to cover the payment, but then it makes up 127% of 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 a sustained record of paying dividends with very little fluctuation. The annual payment during the last 10 years was ¥18.18 in 2015, and the most recent fiscal year payment was ¥60.00. This works out to be a compound annual growth rate (CAGR) of approximately 13% a year 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 impressed us by growing EPS at 10% per year over the past five years. The company is paying out a lot of its cash as a dividend, but it looks okay based on the payout ratio.

Our Thoughts On Nisshin Seifun Group's Dividend

Overall, this is probably not a great income stock, even though the dividend is being raised at the moment. With cash flows lacking, it is difficult to see how the company can sustain a dividend payment. Overall, we don't think this company has the makings of a good income stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. 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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