Unicharm's (TSE:8113) Shareholders Will Receive A Bigger Dividend Than Last Year

Unicharm Corporation's (TSE:8113) dividend will be increasing from last year's payment of the same period to ¥22.00 on 4th of September. This makes the dividend yield about the same as the industry average at 1.0%.

See our latest analysis for Unicharm

Unicharm's Dividend Is Well Covered By Earnings

We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue. However, Unicharm's earnings easily cover the dividend. This means that most of what the business earns is being used to help it grow.

The next year is set to see EPS grow by 32.9%. If the dividend continues along recent trends, we estimate the payout ratio will be 24%, which is in the range that makes us comfortable with the sustainability of the dividend.

Unicharm 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 ¥12.00 in 2014 to the most recent total annual payment of ¥44.00. This works out to be a compound annual growth rate (CAGR) of approximately 14% a year over that time. Rapidly growing dividends for a long time is a very valuable feature for an income stock.

We Could See Unicharm's Dividend Growing

Investors could be attracted to the stock based on the quality of its payment history. It's encouraging to see that Unicharm has been growing its earnings per share at 7.0% a year over the past five years. Unicharm definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

Unicharm Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that Unicharm 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.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Earnings growth generally bodes well for the future value of company dividend payments. See if the 9 Unicharm analysts we track are forecasting continued growth with our free report on analyst estimates for the company. Is Unicharm not quite the opportunity you were looking for? Why not check out our selection of top 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.