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Nihon Shokuhin Kako's (TSE:2892) Dividend Will Be Increased To ¥75.00

Simply Wall St · 6d ago

Nihon Shokuhin Kako Co., Ltd. (TSE:2892) has announced that it will be increasing its dividend from last year's comparable payment on the 29th of June to ¥75.00. This will take the dividend yield to an attractive 3.7%, providing a nice boost to shareholder returns.

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Nihon Shokuhin Kako's Payment Could Potentially Have Solid Earnings Coverage

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. Before making this announcement, Nihon Shokuhin Kako was earning enough to cover the dividend, but it wasn't generating any free cash flows. In general, we consider cash flow to be more important than earnings, so we would be cautious about relying on the sustainability of this dividend.

Looking forward, EPS could fall by 5.8% if the company can't turn things around from the last few years. If the dividend continues along recent trends, we estimate the payout ratio could be 59%, which we consider to be quite comfortable, with most of the company's earnings left over to grow the business in the future.

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TSE:2892 Historic Dividend January 7th 2026

Check out our latest analysis for Nihon Shokuhin Kako

Nihon Shokuhin Kako Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. Since 2016, the annual payment back then was ¥35.00, compared to the most recent full-year payment of ¥150.00. This works out to be a compound annual growth rate (CAGR) of approximately 16% a year over that time. We can see that payments have shown some very nice upward momentum without faltering, which provides some reassurance that future payments will also be reliable.

Dividend Growth May Be Hard To Come By

Investors could be attracted to the stock based on the quality of its payment history. However, initial appearances might be deceiving. Over the past five years, it looks as though Nihon Shokuhin Kako's EPS has declined at around 5.8% a year. If the company is making less over time, it naturally follows that it will also have to pay out less in dividends.

In Summary

Overall, this is probably not a great income stock, even though the dividend is being raised at the moment. With cash flows lacking, it is difficult to see how the company can sustain a dividend payment. This company is not in the top tier of income providing stocks.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Taking the debate a bit further, we've identified 1 warning sign for Nihon Shokuhin Kako that investors need to be conscious of moving forward. Is Nihon Shokuhin Kako not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.