Sumitomo Realty & Development's (TSE:8830) Upcoming Dividend Will Be Larger Than Last Year's

Sumitomo Realty & Development Co., Ltd. (TSE:8830) will increase its dividend from last year's comparable payment on the 4th of December to ¥35.00. Although the dividend is now higher, the yield is only 1.5%, which is below the industry average.

Check out our latest analysis for Sumitomo Realty & Development

Sumitomo Realty & Development's Earnings Easily Cover The Distributions

If it is predictable over a long period, even low dividend yields can be attractive. However, based ont he last payment, Sumitomo Realty & Development was earning enough to cover the dividend pretty comfortably. However, with more than 75% of free cash flow being paid out to shareholders, future growth could potentially be constrained.

Looking forward, earnings per share is forecast to rise by 4.3% over the next year. Assuming the dividend continues along recent trends, we think the payout ratio could be 19% by next year, which is in a pretty sustainable range.

Sumitomo Realty & Development Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. The annual payment during the last 10 years was ¥20.00 in 2014, and the most recent fiscal year payment was ¥70.00. This works out to be a compound annual growth rate (CAGR) of approximately 13% a year over that time. Rapidly growing dividends for a long time is a very valuable feature for an income stock.

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 6.3% per year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for Sumitomo Realty & Development's prospects of growing its dividend payments in the future.

Our Thoughts On Sumitomo Realty & Development's Dividend

Overall, we always like to see the dividend being raised, but we don't think Sumitomo Realty & Development will make a great income stock. While Sumitomo Realty & Development is earning enough to cover the dividend, we are generally unimpressed with its future prospects. We don't think Sumitomo Realty & Development is a great stock to add to your portfolio if income is your focus.

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 Sumitomo Realty & Development that investors should know about before committing capital to this stock. 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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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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