Japan Lifeline (TSE:7575) Is Increasing Its Dividend To ¥42.00

Japan Lifeline Co., Ltd.'s (TSE:7575) dividend will be increasing from last year's payment of the same period to ¥42.00 on 1st of July. This takes the dividend yield to 3.2%, which shareholders will be pleased with.

See our latest analysis for Japan Lifeline

Japan Lifeline's Dividend Is Well Covered By Earnings

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. However, Japan Lifeline's earnings easily cover the dividend. This means that most of what the business earns is being used to help it grow.

Over the next year, EPS is forecast to fall by 4.5%. If the dividend continues along the path it has been on recently, we estimate the payout ratio could be 47%, which is comfortable for the company to continue in the future.

Japan Lifeline 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. The dividend has gone from an annual total of ¥3.13 in 2014 to the most recent total annual payment of ¥42.00. This means that it has been growing its distributions at 30% per annum over that time. So, dividends have been growing pretty quickly, and even more impressively, they haven't experienced any notable falls during this period.

The Dividend's Growth Prospects Are Limited

The company's investors will be pleased to have been receiving dividend income for some time. Earnings has been rising at 3.8% per annum over the last five years, which admittedly is a bit slow. While EPS growth is quite low, Japan Lifeline has the option to increase the payout ratio to return more cash to shareholders.

Japan Lifeline Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that Japan Lifeline is a strong income stock thanks to its track record and growing earnings. The distributions are easily covered by earnings, and there is plenty of cash being generated as well. If earnings do fall over the next 12 months, the dividend could be buffeted a little bit, but we don't think it should cause too much of a problem in the long term. All in all, this checks a lot of the boxes we look for when choosing an income stock.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For example, we've picked out 1 warning sign for Japan Lifeline that investors should know about before committing capital to this stock. 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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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.