Yashima Denki (TSE:3153) Has Announced That It Will Be Increasing Its Dividend To ¥32.00

The board of Yashima Denki Co., Ltd. (TSE:3153) has announced that it will be paying its dividend of ¥32.00 on the 5th of June, an increased payment from last year's comparable dividend. This makes the dividend yield 2.1%, which is above the industry average.

View our latest analysis for Yashima Denki

Yashima Denki's Projected Earnings Seem Likely To Cover Future Distributions

If the payments aren't sustainable, a high yield for a few years won't matter that much. However, prior to this announcement, Yashima Denki's dividend was comfortably covered by both cash flow and earnings. This means that most of its earnings are being retained to grow the business.

Over the next year, EPS could expand by 8.1% if recent trends continue. Assuming the dividend continues along recent trends, we think the payout ratio could be 27% by next year, which is in a pretty sustainable range.

Yashima Denki Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. The dividend has gone from an annual total of ¥13.00 in 2014 to the most recent total annual payment of ¥32.00. This implies that the company grew its distributions at a yearly rate of about 9.4% over that duration. Dividends have grown at a reasonable rate over this period, and without any major cuts in the payment over time, we think this is an attractive combination as it provides a nice boost to shareholder returns.

We Could See Yashima Denki's Dividend Growing

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Yashima Denki has impressed us by growing EPS at 8.1% per year over the past five years. Yashima Denki definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

Yashima Denki Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that Yashima Denki 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.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For example, we've picked out 1 warning sign for Yashima Denki that investors should know about before committing capital to this stock. If you are a dividend investor, you might also want to look at our curated list of high yield 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.