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Nakayama Steel Works' (TSE:5408) Shareholders Will Receive A Smaller Dividend Than Last Year

Simply Wall St · 1d ago

Nakayama Steel Works, Ltd.'s (TSE:5408) dividend is being reduced from last year's payment covering the same period to ¥5.00 on the 29th of June. This means that the dividend yield is 2.2%, which is a bit low when comparing to other companies in the industry.

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Nakayama Steel Works' Projected Earnings Seem Likely To Cover Future Distributions

The dividend yield is a little bit low, but sustainability of the payments is also an important part of evaluating an income stock. However, prior to this announcement, Nakayama Steel Works' dividend was comfortably covered by both cash flow and earnings. This means that most of what the business earns is being used to help it grow.

Over the next year, EPS could expand by 19.6% if recent trends continue. Assuming the dividend continues along recent trends, we think the payout ratio could be 18% by next year, which is in a pretty sustainable range.

historic-dividend
TSE:5408 Historic Dividend December 23rd 2025

Check out our latest analysis for Nakayama Steel Works

Nakayama Steel Works' Dividend Has Lacked Consistency

Even in its relatively short history, the company has reduced the dividend at least once. This makes us cautious about the consistency of the dividend over a full economic cycle. The annual payment during the last 9 years was ¥5.00 in 2016, and the most recent fiscal year payment was ¥13.00. This means that it has been growing its distributions at 11% per annum over that time. Dividends have grown rapidly over this time, but with cuts in the past we are not certain that this stock will be a reliable source of income in the future.

The Dividend Looks Likely To Grow

Given that the dividend has been cut in the past, we need to check if earnings are growing and if that might lead to stronger dividends in the future. Nakayama Steel Works has impressed us by growing EPS at 20% per year over the past five years. A low payout ratio and decent growth suggests that the company is reinvesting well, and it also has plenty of room to increase the dividend over time.

Nakayama Steel Works Looks Like A Great Dividend Stock

Overall, we think that Nakayama Steel Works could be a great option for a dividend investment, although we would have preferred if the dividend wasn't cut this year. The cut will allow the company to continue paying out the dividend without putting the balance sheet under pressure, which means that it could remain sustainable for longer. All in all, this checks a lot of the boxes we look for when choosing an income stock.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For example, we've picked out 2 warning signs for Nakayama Steel Works that investors should know about before committing capital to this stock. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.