Nohmi Bosai (TSE:6744) Is Due To Pay A Dividend Of ¥30.00

The board of Nohmi Bosai Ltd. (TSE:6744) has announced that it will pay a dividend on the 5th of December, with investors receiving ¥30.00 per share. This will take the dividend yield to an attractive 2.8%, providing a nice boost to shareholder returns.

See our latest analysis for Nohmi Bosai

Nohmi Bosai's Payment Has Solid Earnings Coverage

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. Before making this announcement, Nohmi Bosai was paying a whopping 445% as a dividend, but this only made up 36% of its overall earnings. The business might be trying to strike a balance between returning cash to shareholders and reinvesting back into the business, but this high of a payout ratio could definitely force the dividend to be cut if the company runs into a bit of a tough spot.

The next year is set to see EPS grow by 1.6%. If the dividend continues along recent trends, we estimate the payout ratio will be 42%, which is in the range that makes us comfortable with the sustainability of the dividend.

Nohmi Bosai Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2014, the dividend has gone from ¥15.00 total annually to ¥60.00. This means that it has been growing its distributions at 15% per annum over that time. Rapidly growing dividends for a long time is a very valuable feature for an income stock.

The Dividend's Growth Prospects Are Limited

The company's investors will be pleased to have been receiving dividend income for some time. Nohmi Bosai hasn't seen much change in its earnings per share over the last five years. While EPS growth is quite low, Nohmi Bosai has the option to increase the payout ratio to return more cash to shareholders.

In Summary

In summary, while it's always good to see the dividend being raised, we don't think Nohmi Bosai's payments are rock solid. While Nohmi Bosai is earning enough to cover the payments, the cash flows are lacking. We would probably look elsewhere for an income investment.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For instance, we've picked out 1 warning sign for Nohmi Bosai that investors should take into consideration. Is Nohmi Bosai not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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