AEON Financial Service's (TSE:8570) Dividend Will Be ¥28.00
AEON Financial Service Co., Ltd. (TSE:8570) will pay a dividend of ¥28.00 on the 8th of May. Based on this payment, the dividend yield will be 3.0%, which is fairly typical for the industry.
AEON Financial Service's Payment Expected To Have Solid Earnings Coverage
Unless the payments are sustainable, the dividend yield doesn't mean too much.
Having distributed dividends for at least 10 years, AEON Financial Service has a long history of paying out a part of its earnings to shareholders. Based on AEON Financial Service's last earnings report, the payout ratio is at a decent 63%, meaning that the company is able to pay out its dividend with a bit of room to spare.
The next year is set to see EPS grow by 22.8%. Assuming the dividend continues along recent trends, we think the future payout ratio could be 50% by next year, which is in a pretty sustainable range.
See our latest analysis for AEON Financial Service
Dividend Volatility
Although the company has a long dividend history, it has been cut at least once in the last 10 years. Since 2016, the annual payment back then was ¥66.00, compared to the most recent full-year payment of ¥53.00. This works out to be a decline of approximately 2.2% per year over that time. Generally, we don't like to see a dividend that has been declining over time as this can degrade shareholders' returns and indicate that the company may be running into problems.
AEON Financial Service May Find It Hard To Grow The Dividend
With a relatively unstable dividend, it's even more important to see if earnings per share is growing. AEON Financial Service hasn't seen much change in its earnings per share over the last five years. Growth of 0.4% per annum is not particularly high, which might explain why the company is paying out a higher proportion of earnings. While this isn't necessarily a negative, it definitely signals that dividend growth could be constrained in the future unless earnings start to pick up again.
In Summary
Overall, a consistent dividend is a good thing, and we think that AEON Financial Service has the ability to continue this into the future. The payout ratio looks good, but unfortunately the company's dividend track record isn't stellar. The dividend looks okay, but there have been some issues in the past, so we would be a little bit cautious.
It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. However, there are other things to consider for investors when analysing stock performance. As an example, we've identified 1 warning sign for AEON Financial Service that you should be aware of before investing. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.
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