Shinnihonseiyaku's (TSE:4931) Shareholders Will Receive A Bigger Dividend Than Last Year

Shinnihonseiyaku Co., Ltd. (TSE:4931) will increase its dividend from last year's comparable payment on the 22nd of December to ¥52.00. The payment will take the dividend yield to 2.3%, which is in line with the average for the industry.

We check all companies for important risks. See what we found for Shinnihonseiyaku in our free report.

Shinnihonseiyaku's Projected Earnings Seem Likely To Cover Future Distributions

Unless the payments are sustainable, the dividend yield doesn't mean too much. Before making this announcement, Shinnihonseiyaku was easily earning enough to cover the dividend. As a result, a large proportion of what it earned was being reinvested back into the business.

The next year is set to see EPS grow by 18.0%. If the dividend continues along recent trends, we estimate the payout ratio will be 43%, which is in the range that makes us comfortable with the sustainability of the dividend.

See our latest analysis for Shinnihonseiyaku

Shinnihonseiyaku Doesn't Have A Long Payment History

Shinnihonseiyaku's dividend has been pretty stable for a little while now, but we will continue to be cautious until it has been demonstrated for a few more years. The annual payment during the last 5 years was ¥28.00 in 2020, and the most recent fiscal year payment was ¥52.00. This means that it has been growing its distributions at 13% per annum over that time. The dividend has been growing rapidly, however with such a short payment history we can't know for sure if payment can continue to grow over the long term, so caution may be warranted.

We Could See Shinnihonseiyaku's Dividend Growing

The company's investors will be pleased to have been receiving dividend income for some time. Shinnihonseiyaku has seen EPS rising for the last five years, at 5.1% per annum. Shinnihonseiyaku definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

In Summary

In summary, it's great to see that the company can raise the dividend and keep it in a sustainable range. While the payout ratios are a good sign, we are less enthusiastic about the company's dividend record. The payment isn't stellar, but it could make a decent addition to a dividend portfolio.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. However, there are other things to consider for investors when analysing stock performance. See if management have their own wealth at stake, by checking insider shareholdings in Shinnihonseiyaku stock. Is Shinnihonseiyaku not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.