Shionogi (TSE:4507) Will Pay A Dividend Of ¥85.00

The board of Shionogi & Co., Ltd. (TSE:4507) has announced that it will pay a dividend on the 2nd of December, with investors receiving ¥85.00 per share. The payment will take the dividend yield to 2.5%, which is in line with the average for the industry.

Check out our latest analysis for Shionogi

Shionogi's Payment Has Solid Earnings Coverage

Solid dividend yields are great, but they only really help us if the payment is sustainable. However, prior to this announcement, Shionogi'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.

Over the next year, EPS is forecast to expand by 1.1%. Assuming the dividend continues along recent trends, we think the payout ratio could be 33% by next year, which is in a pretty sustainable range.

Shionogi Has A Solid Track Record

The company has an extended history of paying stable dividends. The annual payment during the last 10 years was ¥44.00 in 2014, and the most recent fiscal year payment was ¥170.00. This works out to be a compound annual growth rate (CAGR) of approximately 14% a year over that time. So, dividends have been growing pretty quickly, and even more impressively, they haven't experienced any notable falls during this period.

We Could See Shionogi's Dividend Growing

Investors could be attracted to the stock based on the quality of its payment history. Shionogi has seen EPS rising for the last five years, at 6.1% per annum. With a decent amount of growth and a low payout ratio, we think this bodes well for Shionogi's prospects of growing its dividend payments in the future.

Shionogi Looks Like A Great Dividend Stock

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. 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 in all, this checks a lot of the boxes we look for when choosing an income 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. For example, we've picked out 1 warning sign for Shionogi that investors should know about before committing capital to this stock. Is Shionogi not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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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.

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