Nittetsu Mining (TSE:1515) Is Due To Pay A Dividend Of ¥85.00

The board of Nittetsu Mining Co., Ltd. (TSE:1515) has announced that it will pay a dividend on the 1st of July, with investors receiving ¥85.00 per share. This means that the annual payment will be 3.3% of the current stock price, which is in line with the average for the industry.

Check out our latest analysis for Nittetsu Mining

Nittetsu Mining's Dividend Is Well Covered By Earnings

We aren't too impressed by dividend yields unless they can be sustained over time. However, prior to this announcement, Nittetsu Mining's dividend was comfortably covered by both cash flow and earnings. This means that most of its earnings are being retained to grow the business.

Over the next year, EPS could expand by 12.9% if recent trends continue. If the dividend continues along recent trends, we estimate the payout ratio will be 33%, which is in the range that makes us comfortable with the sustainability of the dividend.

Dividend Volatility

The company's dividend history has been marked by instability, with at least one cut in the last 10 years. Since 2014, the annual payment back then was ¥35.00, compared to the most recent full-year payment of ¥169.00. This works out to be a compound annual growth rate (CAGR) of approximately 17% a year over that time. Dividends have grown rapidly over this time, but with cuts in the past we are not certain that this stock will be a reliable source of income in the future.

The Dividend Looks Likely To Grow

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. We are encouraged to see that Nittetsu Mining has grown earnings per share at 13% per year over the past five years. Nittetsu Mining definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

We Really Like Nittetsu Mining's Dividend

It is generally not great to see the dividend being cut, but we don't think this should happen much if at all in the future given that Nittetsu Mining has the makings of a solid income stock moving forward. By reducing the dividend, pressure will be taken off the balance sheet, which could help the dividend to be consistent in the future. Taking this all into consideration, this looks like it could be a good dividend opportunity.

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. As an example, we've identified 1 warning sign for Nittetsu Mining that you should be aware of before investing. Is Nittetsu Mining 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.