Hamakyorex (TSE:9037) Is Increasing Its Dividend To ¥20.00

Hamakyorex Co., Ltd. (TSE:9037) will increase its dividend from last year's comparable payment on the 19th of June to ¥20.00. The payment will take the dividend yield to 2.4%, which is in line with the average for the industry.

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Hamakyorex's Projected Earnings Seem Likely To Cover Future Distributions

We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue. However, prior to this announcement, Hamakyorex'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 is forecast to expand by 5.8%. Assuming the dividend continues along recent trends, we think the payout ratio could be 33% by next year, which is in a pretty sustainable range.

View our latest analysis for Hamakyorex

Dividend Volatility

Although the company has a long dividend history, it has been cut at least once in the last 10 years. Since 2015, the annual payment back then was ¥5.50, compared to the most recent full-year payment of ¥40.00. This works out to be a compound annual growth rate (CAGR) of approximately 22% a year over that time. Dividends have grown rapidly over this time, but with cuts in the past we are not certain that this stock will be a reliable source of income in the future.

Hamakyorex Could Grow Its Dividend

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. Hamakyorex has seen EPS rising for the last five years, at 8.9% per annum. Growth in EPS bodes well for the dividend, as does the low payout ratio that the company is currently reporting.

We Really Like Hamakyorex's Dividend

Overall, a dividend increase is always good, and we think that Hamakyorex is a strong income stock thanks to its track record and growing earnings. Earnings are easily covering distributions, and the company is generating plenty of cash. All of these factors considered, we think this has solid potential as a dividend stock.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. 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 Hamakyorex that investors should know about before committing capital to this stock. Is Hamakyorex not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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