Sumitomo Realty & Development (TSE:8830) Will Pay A Larger Dividend Than Last Year At ¥42.00

Sumitomo Realty & Development Co., Ltd. (TSE:8830) will increase its dividend from last year's comparable payment on the 5th of December to ¥42.00. Despite this raise, the dividend yield of 1.3% is only a modest boost to shareholder returns.

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Sumitomo Realty & Development's 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. However, prior to this announcement, Sumitomo Realty & Development'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.

The next year is set to see EPS grow by 6.0%. Assuming the dividend continues along recent trends, we think the payout ratio could be 20% by next year, which is in a pretty sustainable range.

View 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 annual payment back then was ¥20.00, compared to the most recent full-year payment of ¥85.00. This means that it has been growing its distributions at 16% per annum over that time. We can see that payments have shown some very nice upward momentum without faltering, which provides some reassurance that future payments will also be reliable.

We Could See Sumitomo Realty & Development's Dividend Growing

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 5.2% 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, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. Distributions are quite easily covered by earnings, which are also being converted to cash flows. 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. However, there are other things to consider for investors when analysing stock performance. As an example, we've identified 1 warning sign for Sumitomo Realty & Development 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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