Nihon Nohyaku (TSE:4997) Has Announced A Dividend Of ¥10.00

The board of Nihon Nohyaku Co., Ltd. (TSE:4997) has announced that it will pay a dividend of ¥10.00 per share on the 20th of June. This makes the dividend yield 2.9%, which is above the industry average.

View our latest analysis for Nihon Nohyaku

Nihon Nohyaku's Projected Earnings Seem Likely To Cover Future Distributions

If the payments aren't sustainable, a high yield for a few years won't matter that much. However, prior to this announcement, Nihon Nohyaku'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.

Looking forward, earnings per share could rise by 11.9% over the next year if the trend from the last few years continues. Assuming the dividend continues along recent trends, we think the payout ratio could be 30% by next year, which is in a pretty sustainable range.

Dividend Volatility

While the company has been paying a dividend for a long time, it has cut the dividend at least once in the last 10 years. The dividend has gone from an annual total of ¥13.00 in 2014 to the most recent total annual payment of ¥20.00. This works out to be a compound annual growth rate (CAGR) of approximately 4.4% a year over that time. The dividend has seen some fluctuations in the past, so even though the dividend was raised this year, we should remember that it has been cut in the past.

The Dividend Looks Likely To Grow

With a relatively unstable dividend, it's even more important to evaluate if earnings per share is growing, which could point to a growing dividend in the future. We are encouraged to see that Nihon Nohyaku has grown earnings per share at 12% per year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for Nihon Nohyaku's prospects of growing its dividend payments in the future.

We Really Like Nihon Nohyaku's Dividend

Overall, a dividend increase is always good, and we think that Nihon Nohyaku is a strong income stock thanks to its track record and growing earnings. 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. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. As an example, we've identified 1 warning sign for Nihon Nohyaku that you should be aware of before investing. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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