Takara's (TSE:7921) Upcoming Dividend Will Be Larger Than Last Year's

Takara & Company Ltd. (TSE:7921) has announced that it will be increasing its dividend from last year's comparable payment on the 4th of August to ¥75.00. This takes the dividend yield to 2.7%, which shareholders will be pleased with.

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Takara's Payment Could Potentially Have Solid Earnings Coverage

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. The last dividend was quite easily covered by Takara's earnings. This indicates that a lot of the earnings are being reinvested into the business, with the aim of fueling growth.

If the trend of the last few years continues, EPS will grow by 7.8% over the next 12 months. Assuming the dividend continues along recent trends, we think the payout ratio could be 57% by next year, which is in a pretty sustainable range.

Check out our latest analysis for Takara

Takara Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2015, the annual payment back then was ¥20.00, compared to the most recent full-year payment of ¥90.00. This means that it has been growing its distributions at 16% per annum over that time. So, dividends have been growing pretty quickly, and even more impressively, they haven't experienced any notable falls during this period.

Takara Could Grow Its Dividend

The company's investors will be pleased to have been receiving dividend income for some time. Takara has impressed us by growing EPS at 7.8% per year over the past five years. The company is paying a reasonable amount of earnings to shareholders, and is growing earnings at a decent rate so we think it could be a decent dividend stock.

We Really Like Takara's Dividend

Overall, a dividend increase is always good, and we think that Takara is a strong income stock thanks to its track record and growing earnings. Distributions are quite easily covered by earnings, which are also being converted to cash flows. Taking this all into consideration, this looks like it could be a good dividend opportunity.

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. See if management have their own wealth at stake, by checking insider shareholdings in Takara 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.