Nippon Primex (TSE:2795) Will Pay A Dividend Of ¥25.00

Nippon Primex Inc. (TSE:2795) will pay a dividend of ¥25.00 on the 25th of June. Based on this payment, the dividend yield will be 2.8%, which is fairly typical for the industry.

Nippon Primex's Payment Could Potentially Have Solid Earnings Coverage

Solid dividend yields are great, but they only really help us if the payment is sustainable. However, prior to this announcement, Nippon Primex'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.

If the trend of the last few years continues, EPS will grow by 4.2% over the next 12 months. If the dividend continues along recent trends, we estimate the payout ratio will be 23%, which is in the range that makes us comfortable with the sustainability of the dividend.

View our latest analysis for Nippon Primex

Nippon Primex 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. The dividend has gone from an annual total of ¥20.00 in 2015 to the most recent total annual payment of ¥25.00. This works out to be a compound annual growth rate (CAGR) of approximately 2.3% a year over that time. Slow and steady dividend growth might not sound that exciting, but dividends have been stable for ten years, which we think makes this a fairly attractive offer.

The Dividend's Growth Prospects Are Limited

The company's investors will be pleased to have been receiving dividend income for some time. Earnings per share has been crawling upwards at 4.2% per year. If Nippon Primex is struggling to find viable investments, it always has the option to increase its payout ratio to pay more to shareholders.

We Really Like Nippon Primex's Dividend

Overall, we like to see the dividend staying consistent, and we think Nippon Primex might even raise payments in the future. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All in all, this checks a lot of the boxes we look for when choosing an income stock.

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. For instance, we've picked out 1 warning sign for Nippon Primex that investors should take into consideration. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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