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

Nohmi Bosai Ltd. (TSE:6744) will pay a dividend of ¥30.00 on the 5th of December. This will take the annual payment to 2.5% of the stock price, which is above what most companies in the industry pay.

See our latest analysis for Nohmi Bosai

Nohmi Bosai's Dividend Is Well Covered By Earnings

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 457% as a dividend, but this only made up 32% of its overall earnings. A cash payout ratio this high could put the dividend under pressure and force the company to reduce it in the future if it were to run into tough times.

Over the next year, EPS is forecast to expand by 3.0%. If the dividend continues along recent trends, we estimate the payout ratio will be 44%, 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 works out to be a compound annual growth rate (CAGR) of approximately 15% a year over that time. We can see that payments have shown some very nice upward momentum without faltering, which provides some reassurance that future payments will also be reliable.

Nohmi Bosai May Find It Hard To Grow The Dividend

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Unfortunately, Nohmi Bosai's earnings per share has been essentially flat over the past five years, which means the dividend may not be increased each year. While growth may be thin on the ground, Nohmi Bosai could always pay out a higher proportion of earnings to increase shareholder returns.

Our Thoughts On Nohmi Bosai's Dividend

In summary, while it's always good to see the dividend being raised, we don't think Nohmi Bosai's payments are rock solid. With cash flows lacking, it is difficult to see how the company can sustain a dividend payment. This company is not in the top tier of income providing stocks.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For example, we've picked out 1 warning sign for Nohmi Bosai 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.

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