Kitanotatsujin's (TSE:2930) Dividend Will Be Increased To ¥2.20

Kitanotatsujin Corporation (TSE:2930) has announced that it will be increasing its dividend from last year's comparable payment on the 22nd of May to ¥2.20. Even though the dividend went up, the yield is still quite low at only 1.4%.

View our latest analysis for Kitanotatsujin

Kitanotatsujin's Payment Could Potentially Have Solid Earnings Coverage

If it is predictable over a long period, even low dividend yields can be attractive. However, Kitanotatsujin's earnings easily cover the dividend. As a result, a large proportion of what it earned was being reinvested back into the business.

Over the next year, EPS is forecast to expand by 4.7%. Assuming the dividend continues along recent trends, we think the payout ratio could be 37% by next year, which is in a pretty sustainable range.

Kitanotatsujin's Dividend Has Lacked Consistency

Looking back, Kitanotatsujin's dividend hasn't been particularly consistent. This makes us cautious about the consistency of the dividend over a full economic cycle. Since 2019, the annual payment back then was ¥4.10, compared to the most recent full-year payment of ¥2.50. Doing the maths, this is a decline of about 7.9% per year. Declining dividends isn't generally what we look for as they can indicate that the company is running into some challenges.

Dividend Growth May Be Hard To Achieve

Given that the track record hasn't been stellar, we really want to see earnings per share growing over time. Kitanotatsujin hasn't seen much change in its earnings per share over the last five years.

Our Thoughts On Kitanotatsujin's Dividend

In summary, while it's always good to see the dividend being raised, we don't think Kitanotatsujin's payments are rock solid. The payments haven't been particularly stable and we don't see huge growth potential, but with the dividend well covered by cash flows it could prove to be reliable over the short term. This company is not in the top tier of income providing stocks.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Taking the debate a bit further, we've identified 1 warning sign for Kitanotatsujin that investors need to be conscious of moving forward. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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