EIZO (TSE:6737) Is Increasing Its Dividend To ¥105.00

EIZO Corporation (TSE:6737) has announced that it will be increasing its dividend from last year's comparable payment on the 2nd of December to ¥105.00. This takes the dividend yield to 4.3%, which shareholders will be pleased with.

View our latest analysis for EIZO

EIZO's Earnings Easily Cover The Distributions

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. Before making this announcement, EIZO's was paying out quite a large proportion of earnings and 87% of free cash flows. This indicates that the company is more focused on returning cash to shareholders than growing the business, but we don't think that there are necessarily signs that the dividend might be unsustainable.

Over the next year, EPS is forecast to expand by 8.5%. Assuming the dividend continues along recent trends, our estimates say the payout ratio could reach 79% - on the higher side, but we wouldn't necessarily say this is unsustainable.

EIZO Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2014, the dividend has gone from ¥50.00 total annually to ¥210.00. This works out to be a compound annual growth rate (CAGR) of approximately 15% a year over that time. So, dividends have been growing pretty quickly, and even more impressively, they haven't experienced any notable falls during this period.

EIZO Could Grow Its Dividend

The company's investors will be pleased to have been receiving dividend income for some time. EIZO has seen EPS rising for the last five years, at 5.6% per annum. The payout ratio is very much on the higher end, which could mean that the growth rate will slow down in the future, and that could flow through to the dividend as well.

Our Thoughts On EIZO's Dividend

Overall, we always like to see the dividend being raised, but we don't think EIZO will make a great income stock. We can't deny that the payments have been very stable, but we are a little bit worried about the very high payout ratio. We don't think EIZO is a great stock to add to your portfolio if income is your focus.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For instance, we've picked out 1 warning sign for EIZO that investors should take into consideration. 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.

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