Yokohama Financial Group (TSE:7186) Is Increasing Its Dividend To ¥20.00
Yokohama Financial Group, Inc.'s (TSE:7186) dividend will be increasing from last year's payment of the same period to ¥20.00 on 28th of May. Based on this payment, the dividend yield for the company will be 2.8%, which is fairly typical for the industry.
Yokohama Financial Group's Payment Expected To Have Solid Earnings Coverage
We aren't too impressed by dividend yields unless they can be sustained over time.
Yokohama Financial Group has established itself as a dividend paying company, given its 9-year history of distributing earnings to shareholders. Taking data from its last earnings report, calculating for the company's payout ratio of 40%shows that Yokohama Financial Group would be able to pay its last dividend without pressure on the balance sheet.
The next year is set to see EPS grow by 16.2%. If the dividend continues on this path, the future payout ratio could be 42% by next year, which we think can be pretty sustainable going forward.
Check out our latest analysis for Yokohama Financial Group
Yokohama Financial Group Doesn't Have A Long Payment History
It is great to see that Yokohama Financial Group has been paying a stable dividend for a number of years now, however we want to be a bit cautious about whether this will remain true through a full economic cycle. The dividend has gone from an annual total of ¥13.00 in 2017 to the most recent total annual payment of ¥40.00. This works out to be a compound annual growth rate (CAGR) of approximately 13% a year over that time. It is always nice to see strong dividend growth, but with such a short payment history we wouldn't be inclined to rely on it until a longer track record can be developed.
The Dividend Looks Likely To Grow
Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Yokohama Financial Group has impressed us by growing EPS at 20% per year over the past five years. Yokohama Financial Group is clearly able to grow rapidly while still returning cash to shareholders, positioning it to become a strong dividend payer in the future.
We Really Like Yokohama Financial Group's Dividend
Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. Earnings are easily covering distributions, and the company is generating plenty of cash. All in all, this checks a lot of the boxes we look for when choosing an income stock.
It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Companies that are growing earnings tend to be the best dividend stocks over the long term. See what the 6 analysts we track are forecasting for Yokohama Financial Group for free with public analyst estimates for the company. Is Yokohama Financial Group not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.