Fast Retailing's (TSE:9983) Dividend Will Be ¥240.00

Fast Retailing Co., Ltd. (TSE:9983) will pay a dividend of ¥240.00 on the 10th of November. This takes the annual payment to 1.1% of the current stock price, which unfortunately is below what the industry is paying.

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Fast Retailing's Payment Could Potentially Have Solid Earnings Coverage

It would be nice for the yield to be higher, but we should also check if higher levels of dividend payment would be sustainable. Before making this announcement, Fast Retailing was easily earning enough to cover the dividend. This means that most of its earnings are being retained to grow the business.

The next year is set to see EPS grow by 7.0%. If the dividend continues on this path, the payout ratio could be 38% by next year, which we think can be pretty sustainable going forward.

See our latest analysis for Fast Retailing

Dividend Volatility

Although the company has a long dividend history, it has been cut at least once in the last 10 years. Since 2015, the annual payment back then was ¥100.00, compared to the most recent full-year payment of ¥480.00. This implies that the company grew its distributions at a yearly rate of about 17% over that duration. Despite the rapid growth in the dividend over the past number of years, we have seen the payments go down the past as well, so that makes us cautious.

The Dividend Looks Likely To Grow

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. Fast Retailing has impressed us by growing EPS at 22% per year over the past five years. A low payout ratio gives the company a lot of flexibility, and growing earnings also make it very easy for it to grow the dividend.

We Really Like Fast Retailing's Dividend

Overall, a dividend increase is always good, and we think that Fast Retailing 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. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. However, there are other things to consider for investors when analysing stock performance. Earnings growth generally bodes well for the future value of company dividend payments. See if the 15 Fast Retailing analysts we track are forecasting continued growth with our free report on analyst estimates for the company. Is Fast Retailing not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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