Otsuka Holdings (TSE:4578) Will Pay A Dividend Of ¥60.00

The board of Otsuka Holdings Co., Ltd. (TSE:4578) has announced that it will pay a dividend on the 2nd of September, with investors receiving ¥60.00 per share. The dividend yield is 1.8% based on this payment, which is a little bit low compared to the other companies in the industry.

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Otsuka Holdings' Projected Earnings Seem Likely To Cover Future Distributions

The dividend yield is a little bit low, but sustainability of the payments is also an important part of evaluating an income stock. Before making this announcement, Otsuka Holdings was easily earning enough to cover the dividend. This means that most of its earnings are being retained to grow the business.

Looking forward, earnings per share is forecast to fall by 1.9% over the next year. If the dividend continues along the path it has been on recently, we estimate the payout ratio could be 19%, which is comfortable for the company to continue in the future.

Check out our latest analysis for Otsuka Holdings

Otsuka Holdings Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. Since 2015, the annual payment back then was ¥75.00, compared to the most recent full-year payment of ¥120.00. This means that it has been growing its distributions at 4.8% per annum over that time. Although we can't deny that the dividend has been remarkably stable in the past, the growth has been pretty muted.

The Dividend Looks Likely To Grow

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. It's encouraging to see that Otsuka Holdings has been growing its earnings per share at 20% a year over the past five years. Otsuka Holdings definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

Otsuka Holdings Looks Like A Great Dividend Stock

In summary, it is good to see that the dividend is staying consistent, and we don't think there is any reason to suspect this might change over the medium term. The company is generating plenty of cash, and the earnings also quite easily cover the distributions. However, it is worth noting that the earnings are expected to fall over the next year, which may not change the long term outlook, but could affect the dividend payment in the next 12 months. 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. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Case in point: We've spotted 2 warning signs for Otsuka Holdings (of which 1 shouldn't be ignored!) you should know about. Is Otsuka Holdings not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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