Hachijuni Bank (TSE:8359) Is Increasing Its Dividend To ¥30.00

The Hachijuni Bank, Ltd. (TSE:8359) has announced that it will be increasing its dividend from last year's comparable payment on the 23rd of June to ¥30.00. This takes the annual payment to 2.6% of the current stock price, which is about average for the industry.

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Hachijuni Bank's Payment Expected To Have Solid Earnings Coverage

We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue.

Hachijuni Bank has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. Based on Hachijuni Bank's last earnings report, the payout ratio is at a decent 39%, meaning that the company is able to pay out its dividend with a bit of room to spare.

Over the next year, EPS is forecast to expand by 7.2%. Assuming the dividend continues along recent trends, we think the future payout ratio could be 40% by next year, which is in a pretty sustainable range.

View our latest analysis for Hachijuni Bank

Dividend Volatility

Although the company has a long dividend history, it has been cut at least once in the last 10 years. Since 2015, the dividend has gone from ¥9.00 total annually to ¥45.00. This implies that the company grew its distributions at a yearly rate of about 17% over that duration. Hachijuni Bank has grown distributions at a rapid rate despite cutting the dividend at least once in the past. Companies that cut once often cut again, so we would be cautious about buying this stock solely for the dividend income.

The Dividend Looks Likely To Grow

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. Hachijuni Bank has impressed us by growing EPS at 29% per year over the past five years. A low payout ratio gives the company a lot of flexibility, and growing earnings also make it very easy for it to grow the dividend.

Hachijuni Bank Looks Like A Great Dividend Stock

Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. 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.

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. As an example, we've identified 1 warning sign for Hachijuni Bank that you should be aware of before investing. Is Hachijuni Bank not quite the opportunity you were looking for? Why not check out our selection of top 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.