Shionogi & Co., Ltd. (TSE:4507) will pay a dividend of ¥85.00 on the 2nd of December. This makes the dividend yield about the same as the industry average at 2.6%.
View our latest analysis for Shionogi
Shionogi's Future Dividend Projections Appear Well Covered By Earnings
Unless the payments are sustainable, the dividend yield doesn't mean too much. Before making this announcement, Shionogi was easily earning enough to cover the dividend. This means that most of its earnings are being retained to grow the business.
Over the next year, EPS is forecast to expand by 2.2%. Assuming the dividend continues along recent trends, we think the payout ratio could be 35% 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 implies that the company grew its distributions at a yearly rate of about 14% over that duration. Rapidly growing dividends for a long time is a very valuable feature for an income stock.
We Could See Shionogi's Dividend Growing
Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Shionogi has impressed us by growing EPS at 5.7% 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.
We Really Like Shionogi's Dividend
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. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Companies that are growing earnings tend to be the best dividend stocks over the long term. See what the 13 analysts we track are forecasting for Shionogi for free with public analyst estimates for the company. If you are a dividend investor, you might also want to look at our curated list of high yield 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.
About TSE:4507
Shionogi
Engages in the research, development, manufacture, and distribution of pharmaceuticals, diagnostic reagents, and medical devices in Japan.
Flawless balance sheet, undervalued and pays a dividend.
