Hoshi Iryo-Sanki (TSE:7634) Will Pay A Dividend Of ¥35.00

Hoshi Iryo-Sanki Co., Ltd.'s (TSE:7634) investors are due to receive a payment of ¥35.00 per share on 1st of July. This will take the annual payment to 1.2% of the stock price, which is above what most companies in the industry pay.

Check out our latest analysis for Hoshi Iryo-Sanki

Hoshi Iryo-Sanki's Dividend Is Well Covered By Earnings

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. Before making this announcement, Hoshi Iryo-Sanki was easily earning enough to cover the dividend. This means that most of its earnings are being retained to grow the business.

If the trend of the last few years continues, EPS will grow by 10.1% over the next 12 months. If the dividend continues on this path, the payout ratio could be 15% by next year, which we think can be pretty sustainable going forward.

Hoshi Iryo-Sanki 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 2014, the dividend has gone from ¥40.00 total annually to ¥60.00. This implies that the company grew its distributions at a yearly rate of about 4.1% over that duration. While the consistency in the dividend payments is impressive, we think the relatively slow rate of growth is less attractive.

The Dividend Looks Likely To Grow

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. It's encouraging to see that Hoshi Iryo-Sanki has been growing its earnings per share at 10% a year over the past five years. Hoshi Iryo-Sanki definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

We Really Like Hoshi Iryo-Sanki's Dividend

Overall, a dividend increase is always good, and we think that Hoshi Iryo-Sanki is a strong income stock thanks to its track record and growing earnings. Earnings are easily covering distributions, and the company is generating plenty of cash. All in all, this checks a lot of the boxes we look for when choosing an income stock.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. 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 Hoshi Iryo-Sanki 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.