Sumitomo Realty & Development (TSE:8830) Is Paying Out A Larger Dividend Than Last Year

Sumitomo Realty & Development Co., Ltd.'s (TSE:8830) dividend will be increasing from last year's payment of the same period to ¥42.00 on 5th of December. Even though the dividend went up, the yield is still quite low at only 1.5%.

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Sumitomo Realty & Development's Payment Could Potentially Have Solid Earnings Coverage

If it is predictable over a long period, even low dividend yields can be attractive. Before making this announcement, Sumitomo Realty & Development was easily earning enough to cover the dividend. As a result, a large proportion of what it earned was being reinvested back into the business.

Over the next year, EPS is forecast to expand by 5.3%. If the dividend continues on this path, the payout ratio could be 20% by next year, which we think can be pretty sustainable going forward.

Check out our latest analysis for Sumitomo Realty & Development

Sumitomo Realty & Development Has A Solid Track Record

The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. Since 2015, the dividend has gone from ¥20.00 total annually to ¥85.00. This means that it has been growing its distributions at 16% per annum over that time. Rapidly growing dividends for a long time is a very valuable feature for an income stock.

The Dividend Has Growth Potential

The company's investors will be pleased to have been receiving dividend income for some time. We are encouraged to see that Sumitomo Realty & Development has grown earnings per share at 6.6% per year over the past five years. A low payout ratio and decent growth suggests that the company is reinvesting well, and it also has plenty of room to increase the dividend over time.

Sumitomo Realty & Development Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that Sumitomo Realty & Development is a strong income stock thanks to its track record and growing earnings. 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 of these factors considered, we think this has solid potential as a dividend stock.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Taking the debate a bit further, we've identified 1 warning sign for Sumitomo Realty & Development that investors need to be conscious of moving forward. Is Sumitomo Realty & Development not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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