Nihon Nohyaku (TSE:4997) Will Pay A Dividend Of ¥12.00

The board of Nihon Nohyaku Co., Ltd. (TSE:4997) has announced that it will pay a dividend on the 4th of December, with investors receiving ¥12.00 per share. This will take the dividend yield to an attractive 3.0%, providing a nice boost to shareholder returns.

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

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. However, Nihon Nohyaku's earnings easily cover the dividend. As a result, a large proportion of what it earned was being reinvested back into the business.

Looking forward, earnings per share could rise by 15.0% 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 70% by next year, which is in a pretty sustainable range.

Check out our latest analysis for Nihon Nohyaku

Dividend Volatility

The company has a long dividend track record, but it doesn't look great with cuts in the past. Since 2015, the dividend has gone from ¥15.00 total annually to ¥25.00. This means that it has been growing its distributions at 5.2% per annum over that time. We have seen cuts in the past, so while the growth looks promising we would be a little bit cautious about its track record.

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. Nihon Nohyaku has seen EPS rising for the last five years, at 15% per annum. Nihon Nohyaku definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

Nihon Nohyaku Looks Like A Great Dividend Stock

Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. 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.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For example, we've identified 3 warning signs for Nihon Nohyaku (1 is significant!) 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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