Nippon Sanso Holdings (TSE:4091) Has Announced A Dividend Of ¥24.00

The board of Nippon Sanso Holdings Corporation (TSE:4091) has announced that it will pay a dividend on the 20th of June, with investors receiving ¥24.00 per share. This payment means the dividend yield will be 1.1%, which is below the average for the industry.

Check out our latest analysis for Nippon Sanso Holdings

Nippon Sanso Holdings' Payment Could Potentially Have Solid Earnings Coverage

If it is predictable over a long period, even low dividend yields can be attractive. However, prior to this announcement, Nippon Sanso Holdings' dividend was comfortably covered by both cash flow and earnings. As a result, a large proportion of what it earned was being reinvested back into the business.

Looking forward, earnings per share is forecast to rise by 7.4% over the next year. If the dividend continues on this path, the payout ratio could be 20% by next year, which we think can be pretty sustainable going forward.

Nippon Sanso Holdings 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 annual payment during the last 10 years was ¥12.00 in 2014, and the most recent fiscal year payment was ¥48.00. This implies that the company grew its distributions at a yearly rate of about 15% over that duration. It is good to see that there has been strong dividend growth, and that there haven't been any cuts for a long time.

The Dividend Looks Likely To Grow

The company's investors will be pleased to have been receiving dividend income for some time. It's encouraging to see that Nippon Sanso Holdings has been growing its earnings per share at 16% a year over the past five years. Nippon Sanso Holdings definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

Nippon Sanso Holdings Looks Like A Great Dividend Stock

Overall, we think that this is a great income investment, and we think that maintaining the dividend this year may have been a conservative choice. Earnings are easily covering distributions, and the company is generating plenty of cash. All of these factors considered, we think this has solid potential as a dividend stock.

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. Taking the debate a bit further, we've identified 1 warning sign for Nippon Sanso Holdings that investors need to be conscious of moving forward. Is Nippon Sanso Holdings not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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