Yokogawa Electric's (TSE:6841) Dividend Will Be Increased To ¥23.00

The board of Yokogawa Electric Corporation (TSE:6841) has announced that it will be paying its dividend of ¥23.00 on the 28th of June, an increased payment from last year's comparable dividend. This takes the annual payment to 1.5% of the current stock price, which is about average for the industry.

See our latest analysis for Yokogawa Electric

Yokogawa Electric's Earnings Easily Cover The Distributions

While it is always good to see a solid dividend yield, we should also consider whether the payment is feasible. However, Yokogawa Electric's earnings easily cover the dividend. This means that most of what the business earns is being used to help it grow.

EPS is set to fall by 34.4% over the next 12 months. If the dividend continues along recent trends, we estimate the payout ratio could be 24%, which we consider to be quite comfortable, with most of the company's earnings left over to grow the business in the future.

Yokogawa Electric Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2014, the dividend has gone from ¥12.00 total annually to ¥46.00. This means that it has been growing its distributions at 14% per annum 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.

The Dividend Looks Likely To Grow

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. It's encouraging to see that Yokogawa Electric has been growing its earnings per share at 19% a year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for Yokogawa Electric's prospects of growing its dividend payments in the future.

We Really Like Yokogawa Electric's Dividend

Overall, a dividend increase is always good, and we think that Yokogawa Electric is a strong income stock thanks to its track record and growing earnings. The earnings easily cover the company's distributions, and the company is generating plenty of cash. However, it is worth noting that the earnings are expected to fall over the next year, which may not change the long term outlook, but could affect the dividend payment in the next 12 months. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Taking the debate a bit further, we've identified 1 warning sign for Yokogawa Electric that investors need to be conscious of moving forward. Is Yokogawa Electric not quite the opportunity you were looking for? Why not check out our selection of top 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.