JAPAN MATERIAL's (TSE:6055) Upcoming Dividend Will Be Larger Than Last Year's

JAPAN MATERIAL Co., Ltd. (TSE:6055) will increase its dividend from last year's comparable payment on the 26th of June to ¥27.00. This takes the dividend yield to 1.6%, which shareholders will be pleased with.

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JAPAN MATERIAL's Future Dividend Projections Appear Well Covered By Earnings

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. Before making this announcement, JAPAN MATERIAL 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 12.8%. Assuming the dividend continues along recent trends, we think the payout ratio could be 33% by next year, which is in a pretty sustainable range.

Check out our latest analysis for JAPAN MATERIAL

JAPAN MATERIAL Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2015, the dividend has gone from ¥3.67 total annually to ¥27.00. This means that it has been growing its distributions at 22% 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

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. JAPAN MATERIAL has seen EPS rising for the last five years, at 6.4% per annum. 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.

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. 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. 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 JAPAN MATERIAL that investors should know about before committing capital to this stock. Is JAPAN MATERIAL 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.