Chubu Electric Power Company (TSE:9502) Has Announced A Dividend Of ¥35.00

Chubu Electric Power Company, Incorporated (TSE:9502) has announced that it will pay a dividend of ¥35.00 per share on the 29th of June. Based on this payment, the dividend yield for the company will be 3.0%, which is fairly typical for the industry.

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Chubu Electric Power Company's Payment Could Potentially Have Solid Earnings Coverage

Unless the payments are sustainable, the dividend yield doesn't mean too much. Before making this announcement, Chubu Electric Power Company was easily earning enough to cover the dividend. This means that most of its earnings are being retained to grow the business.

EPS is set to fall by 0.6% over the next 12 months. Assuming the dividend continues along recent trends, we believe the payout ratio could be 26%, which we are pretty comfortable with and we think is feasible on an earnings basis.

View our latest analysis for Chubu Electric Power Company

Chubu Electric Power Company Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. Since 2015, the annual payment back then was ¥10.00, compared to the most recent full-year payment of ¥70.00. This implies that the company grew its distributions at a yearly rate of about 21% over that duration. Rapidly growing dividends for a long time is a very valuable feature for an income stock.

Chubu Electric Power Company Could Grow Its Dividend

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Chubu Electric Power Company has impressed us by growing EPS at 9.3% per year over the past five years. Chubu Electric Power Company definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

We Really Like Chubu Electric Power Company's Dividend

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. The distributions are easily covered by earnings, and there is plenty of cash being generated as well. We should point out that the earnings are expected to fall over the next 12 months, which won't be a problem if this doesn't become a trend, but could cause some turbulence in the next year. All of these factors considered, we think this has solid potential as a dividend stock.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. However, there are other things to consider for investors when analysing stock performance. Taking the debate a bit further, we've identified 2 warning signs for Chubu Electric Power Company that investors need to be conscious of moving forward. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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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.