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 on the 20th of June, with investors receiving ¥10.00 per share. The payment will take the dividend yield to 2.5%, which is in line with the average for the industry.

View our latest analysis for Nihon Nohyaku

Nihon Nohyaku's Future Dividend Projections Appear Well Covered By Earnings

We like a dividend to be consistent over the long term, so checking whether it is sustainable is important. However, prior to this announcement, Nihon Nohyaku's dividend was comfortably covered by both cash flow and earnings. This means that most of what the business earns is being used to help it grow.

Over the next year, EPS could expand by 15.0% if recent trends continue. If the dividend continues along recent trends, we estimate the payout ratio will be 25%, which is in the range that makes us comfortable with the sustainability of the dividend.

Dividend Volatility

The company has a long dividend track record, but it doesn't look great with cuts in the past. Since 2015, the annual payment back then was ¥13.00, compared to the most recent full-year payment of ¥20.00. This means that it has been growing its distributions at 4.4% per annum over that time. We're glad to see the dividend has risen, but with a limited rate of growth and fluctuations in the payments the total shareholder return may be limited.

The Dividend Looks Likely To Grow

Given that the dividend has been cut in the past, we need to check if earnings are growing and if that might lead to stronger dividends in the future. We are encouraged to see that Nihon Nohyaku has grown earnings per share at 15% 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.

Nihon Nohyaku Looks Like A Great Dividend Stock

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. Earnings are easily covering distributions, and the company is generating plenty of cash. 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. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. 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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