Nippon Paint Holdings (TSE:4612) Is Paying Out A Dividend Of ¥8.00

The board of Nippon Paint Holdings Co., Ltd. (TSE:4612) has announced that it will pay a dividend on the 28th of March, with investors receiving ¥8.00 per share. This means the annual payment will be 1.7% of the current stock price, which is lower than the industry average.

View our latest analysis for Nippon Paint Holdings

Nippon Paint Holdings' Earnings Easily Cover The Distributions

If it is predictable over a long period, even low dividend yields can be attractive. However, prior to this announcement, Nippon Paint 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.

Over the next year, EPS is forecast to expand by 8.3%. If the dividend continues along recent trends, we estimate the payout ratio will be 29%, 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. The dividend has gone from an annual total of ¥3.20 in 2014 to the most recent total annual payment of ¥15.00. This implies that the company grew its distributions at a yearly rate of about 17% over that duration. 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

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. We are encouraged to see that Nippon Paint Holdings has grown earnings per share at 12% per year over the past five years. Growth in EPS bodes well for the dividend, as does the low payout ratio that the company is currently reporting.

Nippon Paint Holdings Looks Like A Great Dividend Stock

In summary, it is good to see that the dividend is staying consistent, and we don't think there is any reason to suspect this might change over the medium term. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. All of these factors considered, we think this has solid potential as a dividend stock.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. 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 10 Nippon Paint Holdings analysts we track are forecasting continued growth with our free report on analyst estimates for the company. Is Nippon Paint Holdings not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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