Japan Investment Adviser's (TSE:7172) Dividend Will Be Increased To ¥44.00

Japan Investment Adviser Co., Ltd. (TSE:7172) has announced that it will be increasing its dividend from last year's comparable payment on the 27th of March to ¥44.00. This will take the dividend yield to an attractive 4.3%, providing a nice boost to shareholder returns.

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Japan Investment Adviser's Future Dividend Projections Appear Well Covered By Earnings

A big dividend yield for a few years doesn't mean much if it can't be sustained. However, based ont he last payment, Japan Investment Adviser was earning enough to cover the dividend pretty comfortably. The business is earning enough to make the dividend feasible, but the cash payout ratio of 86% shows that most of the cash is going back to the shareholders, which could constrain growth prospects going forward.

Over the next year, EPS is forecast to expand by 30.7%. If the dividend continues on this path, the payout ratio could be 36% by next year, which we think can be pretty sustainable going forward.

See our latest analysis for Japan Investment Adviser

Dividend Volatility

Although the company has a long dividend history, it has been cut at least once in the last 10 years. The dividend has gone from an annual total of ¥5.00 in 2015 to the most recent total annual payment of ¥88.00. This works out to be a compound annual growth rate (CAGR) of approximately 33% a year over that time. Despite the rapid growth in the dividend over the past number of years, we have seen the payments go down the past as well, so that makes us cautious.

The Dividend's Growth Prospects Are Limited

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. Although it's important to note that Japan Investment Adviser's earnings per share has basically not grown from where it was five years ago, which could erode the purchasing power of the dividend over time. Earnings growth is slow, but on the plus side, the dividend payout ratio is low and dividends could grow faster than earnings, if the company decides to increase its payout ratio.

Our Thoughts On Japan Investment Adviser's Dividend

Overall, we always like to see the dividend being raised, but we don't think Japan Investment Adviser will make a great income stock. The low payout ratio is a redeeming feature, but generally we are not too happy with the payments Japan Investment Adviser has been making. We would probably look elsewhere for an income investment.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. However, there are other things to consider for investors when analysing stock performance. To that end, Japan Investment Adviser has 3 warning signs (and 1 which can't be ignored) we think you should know about. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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