Hodogaya Chemical's (TSE:4112) Dividend Will Be Increased To ¥42.50

Hodogaya Chemical Co., Ltd. (TSE:4112) will increase its dividend from last year's comparable payment on the 16th of December to ¥42.50. The payment will take the dividend yield to 1.8%, which is in line with the average for the industry.

Check out our latest analysis for Hodogaya Chemical

Hodogaya Chemical's Earnings Easily Cover The Distributions

While it is always good to see a solid dividend yield, we should also consider whether the payment is feasible. However, Hodogaya Chemical's earnings easily cover the dividend. This means that most of what the business earns is being used to help it grow.

Over the next year, EPS is forecast to expand by 22.6%. If the dividend continues along recent trends, we estimate the payout ratio will be 22%, which is in the range that makes us comfortable with the sustainability of the dividend.

Hodogaya Chemical Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2014, the dividend has gone from ¥40.00 total annually to ¥85.00. This works out to be a compound annual growth rate (CAGR) of approximately 7.8% a year over that time. The dividend has been growing very nicely for a number of years, and has given its shareholders some nice income in their portfolios.

We Could See Hodogaya Chemical's Dividend Growing

The company's investors will be pleased to have been receiving dividend income for some time. Hodogaya Chemical has impressed us by growing EPS at 5.6% per year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for Hodogaya Chemical's prospects of growing its dividend payments in the future.

We Really Like Hodogaya Chemical's Dividend

Overall, a dividend increase is always good, and we think that Hodogaya Chemical 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. All of these factors considered, we think this has solid potential as a dividend stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For instance, we've picked out 1 warning sign for Hodogaya Chemical that investors should take into consideration. If you are a dividend investor, you might also want to look at our curated list of high yield 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.

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