JAPAN MATERIAL's (TSE:6055) Shareholders Will Receive A Bigger Dividend Than Last Year

JAPAN MATERIAL Co., Ltd. (TSE:6055) will increase its dividend from last year's comparable payment on the 27th of June to ¥22.00. This takes the dividend yield to 1.3%, which shareholders will be pleased with.

Check out our latest analysis for JAPAN MATERIAL

JAPAN MATERIAL's Projected Earnings Seem Likely To Cover Future Distributions

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. However, prior to this announcement, JAPAN MATERIAL's dividend was comfortably covered by both cash flow and earnings. This means that most of what the business earns is being used to help it grow.

Over the next year, EPS is forecast to expand by 20.5%. If the dividend continues on this path, the payout ratio could be 35% by next year, which we think can be pretty sustainable going forward.

JAPAN MATERIAL 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 2014, the dividend has gone from ¥2.53 total annually to ¥22.00. This means that it has been growing its distributions at 24% per annum over that time. It is good to see that there has been strong dividend growth, and that there haven't been any cuts for a long time.

We Could See JAPAN MATERIAL'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 JAPAN MATERIAL has grown earnings per share at 5.7% per year over the past five years. Growth in EPS bodes well for the dividend, as does the low payout ratio that the company is currently reporting.

JAPAN MATERIAL Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that JAPAN MATERIAL is a strong income stock thanks to its track record and growing earnings. Distributions are quite easily covered by earnings, which are also being converted to cash flows. 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. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Taking the debate a bit further, we've identified 1 warning sign for JAPAN MATERIAL that investors need to be conscious of moving forward. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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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.