Ad-Sol Nissin Corporation (TSE:3837) has announced that it will be increasing its periodic dividend on the 1st of July to ¥23.00, which will be 15% higher than last year's comparable payment amount of ¥20.00. This takes the dividend yield to 2.3%, which shareholders will be pleased with.
Check out our latest analysis for Ad-Sol Nissin
Ad-Sol Nissin's Earnings Easily Cover The Distributions
If the payments aren't sustainable, a high yield for a few years won't matter that much. However, prior to this announcement, Ad-Sol Nissin's dividend was comfortably covered by both cash flow and earnings. As a result, a large proportion of what it earned was being reinvested back into the business.
Over the next year, EPS could expand by 1.7% if recent trends continue. If the dividend continues along recent trends, we estimate the payout ratio will be 45%, which is in the range that makes us comfortable with the sustainability of the dividend.
Ad-Sol Nissin Doesn't Have A Long Payment History
The dividend hasn't seen any major cuts in the past, but the company has only been paying a dividend for 4 years, which isn't that long in the grand scheme of things. The dividend has gone from an annual total of ¥33.00 in 2020 to the most recent total annual payment of ¥39.00. This means that it has been growing its distributions at 4.3% per annum over that time. Modest dividend growth is good to see, especially with the payments being relatively stable. However, the payment history is relatively short and we wouldn't want to rely on this dividend too much.
The Dividend's Growth Prospects Are Limited
Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Ad-Sol Nissin hasn't seen much change in its earnings per share over the last five years. While growth may be thin on the ground, Ad-Sol Nissin could always pay out a higher proportion of earnings to increase shareholder returns.
Our Thoughts On Ad-Sol Nissin's Dividend
In summary, it's great to see that the company can raise the dividend and keep it in a sustainable range. While the payout ratios are a good sign, we are less enthusiastic about the company's dividend record. The payment isn't stellar, but it could make a decent addition to a dividend portfolio.
It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. However, there are other things to consider for investors when analysing stock performance. For instance, we've picked out 1 warning sign for Ad-Sol Nissin that investors should take into consideration. Is Ad-Sol Nissin 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.
About TSE:3837
Ad-Sol Nissin
Develops information and embedded systems for companies in Japan.
Flawless balance sheet with proven track record.
