Nisshin OilliO GroupLtd (TSE:2602) Will Pay A Dividend Of ¥90.00

The Nisshin OilliO Group,Ltd.'s (TSE:2602) investors are due to receive a payment of ¥90.00 per share on 25th of June. This makes the dividend yield 3.5%, which will augment investor returns quite nicely.

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Nisshin OilliO GroupLtd's Payment Could Potentially Have Solid Earnings Coverage

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. Based on the last payment, Nisshin OilliO GroupLtd was earning enough to cover the dividend, but free cash flows weren't positive. With the company not bringing in any cash, paying out to shareholders is bound to become difficult at some point.

EPS is set to fall by 7.0% over the next 12 months. Assuming the dividend continues along recent trends, we believe the payout ratio could be 29%, which we are pretty comfortable with and we think is feasible on an earnings basis.

See our latest analysis for Nisshin OilliO GroupLtd

Nisshin OilliO GroupLtd Has A Solid Track Record

The company has an extended history of paying stable dividends. The annual payment during the last 10 years was ¥50.00 in 2015, and the most recent fiscal year payment was ¥180.00. This means that it has been growing its distributions at 14% per annum 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.

The Dividend Looks Likely To Grow

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Nisshin OilliO GroupLtd has impressed us by growing EPS at 22% per year over the past five years. Earnings per share is growing at a solid clip, and the payout ratio is low which we think is an ideal combination in a dividend stock as the company can quite easily raise the dividend in the future.

Our Thoughts On Nisshin OilliO GroupLtd's Dividend

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Nisshin OilliO GroupLtd's payments, as there could be some issues with sustaining them into the future. While Nisshin OilliO GroupLtd is earning enough to cover the payments, the cash flows are lacking. 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. However, there are other things to consider for investors when analysing stock performance. To that end, Nisshin OilliO GroupLtd has 4 warning signs (and 2 which can't be ignored) we think you should know about. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

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