Shiga Bank (TSE:8366) Has Announced A Dividend Of ¥65.00

The Shiga Bank, Ltd. (TSE:8366) will pay a dividend of ¥65.00 on the 26th of June. Even though the dividend went up, the yield is still quite low at only 1.8%.

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Shiga Bank's Earnings Will Easily Cover The Distributions

While yield is important, another factor to consider about a company's dividend is whether the current payout levels are feasible.

Having distributed dividends for at least 10 years, Shiga Bank has a long history of paying out a part of its earnings to shareholders. Using data from its latest earnings report, Shiga Bank's payout ratio sits at 24%, an extremely comfortable number that shows that it can pay its dividend.

Over the next year, EPS is forecast to expand by 28.5%. Assuming the dividend continues along recent trends, we think the future payout ratio could be 25% by next year, which is in a pretty sustainable range.

Check out our latest analysis for Shiga Bank

Shiga Bank Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. Since 2015, the dividend has gone from ¥30.00 total annually to ¥130.00. This implies that the company grew its distributions at a yearly rate of about 16% over that duration. It is good to see that there has been strong dividend growth, and that there haven't been any cuts for a long time.

The Dividend Looks Likely To Grow

Investors could be attracted to the stock based on the quality of its payment history. Shiga Bank has impressed us by growing EPS at 18% per year over the past five years. Shiga Bank definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

We Really Like Shiga Bank's Dividend

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Taking the debate a bit further, we've identified 1 warning sign for Shiga Bank that investors need to be conscious of moving forward. 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.