Miyoshi Oil & Fat (TSE:4404) Is Increasing Its Dividend To ¥100.00

Miyoshi Oil & Fat Co., Ltd. (TSE:4404) will increase its dividend from last year's comparable payment on the 27th of March to ¥100.00. This takes the dividend yield to 2.9%, which shareholders will be pleased with.

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Miyoshi Oil & Fat's Projected Earnings Seem Likely To Cover Future Distributions

If the payments aren't sustainable, a high yield for a few years won't matter that much. Before making this announcement, Miyoshi Oil & Fat was paying a whopping 156% as a dividend, but this only made up 6.7% of its overall earnings. The business might be trying to strike a balance between returning cash to shareholders and reinvesting back into the business, but this high of a payout ratio could definitely force the dividend to be cut if the company runs into a bit of a tough spot.

Looking forward, earnings per share could rise by 59.4% over the next year if the trend from the last few years continues. If the dividend continues along recent trends, we estimate the payout ratio will be 7.3%, which is in the range that makes us comfortable with the sustainability of the dividend.

See our latest analysis for Miyoshi Oil & Fat

Miyoshi Oil & Fat Has A Solid Track Record

The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. Since 2015, the annual payment back then was ¥30.00, compared to the most recent full-year payment of ¥70.00. This means that it has been growing its distributions at 8.8% per annum over that time. Companies like this can be very valuable over the long term, if the decent rate of growth can be maintained.

The Dividend Looks Likely To Grow

The company's investors will be pleased to have been receiving dividend income for some time. We are encouraged to see that Miyoshi Oil & Fat has grown earnings per share at 59% per year over the past five years. Earnings per share is growing at a solid clip, and the payout ratio is low which we think is an ideal combination in a dividend stock as the company can quite easily raise the dividend in the future.

Our Thoughts On Miyoshi Oil & Fat's Dividend

Overall, this is probably not a great income stock, even though the dividend is being raised at the moment. While Miyoshi Oil & Fat is earning enough to cover the payments, the cash flows are lacking. Overall, we don't think this company has the makings of a good income stock.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For instance, we've picked out 2 warning signs for Miyoshi Oil & Fat that investors should take into consideration. 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.