Kibun Foods (TSE:2933) Is Increasing Its Dividend To ¥23.50

Kibun Foods Inc. (TSE:2933) will increase its dividend from last year's comparable payment on the 25th of June to ¥23.50. This makes the dividend yield 2.2%, which is above the industry average.

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Kibun Foods' Projected Earnings Seem Likely To Cover Future Distributions

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. However, prior to this announcement, Kibun Foods' dividend was comfortably covered by both cash flow and earnings. This means that most of its earnings are being retained to grow the business.

Over the next year, EPS could expand by 15.5% if recent trends continue. If the dividend continues along recent trends, we estimate the payout ratio will be 22%, which is in the range that makes us comfortable with the sustainability of the dividend.

Check out our latest analysis for Kibun Foods

Kibun Foods Is Still Building Its Track Record

Even though the company has been paying a consistent dividend for a while, we would like to see a few more years before we feel comfortable relying on it. Since 2020, the annual payment back then was ¥15.00, compared to the most recent full-year payment of ¥23.50. This works out to be a compound annual growth rate (CAGR) of approximately 9.4% a year over that time. The dividend has been growing as a reasonable rate, which we like. However, investors will probably want to see a longer track record before they consider Kibun Foods to be a consistent dividend paying stock.

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. Kibun Foods has seen EPS rising for the last five years, at 16% per annum. A low payout ratio and decent growth suggests that the company is reinvesting well, and it also has plenty of room to increase the dividend over time.

We Really Like Kibun Foods' Dividend

Overall, a dividend increase is always good, and we think that Kibun Foods is a strong income stock thanks to its track record and growing earnings. Distributions are quite easily covered by earnings, which are also being converted to cash flows. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For example, we've identified 2 warning signs for Kibun Foods (1 makes us a bit uncomfortable!) that you should be aware of before investing. Is Kibun Foods not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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