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Daihatsu Diesel Mfg (TSE:6023) Is Paying Out Less In Dividends Than Last Year

Daihatsu Diesel Mfg. Co., Ltd. (TSE:6023) has announced that on 30th of June, it will be paying a dividend of¥39.00, which a reduction from last year’s comparable dividend. This means that the annual payment will be 2.1% of the current stock price, which is in line with the average for the industry.

While the dividend yield is important for income investors, it is also important to consider any large share price moves, as this will generally outweigh any gains from distributions. Investors will be pleased to see that Daihatsu Diesel Mfg’s stock price has increased by 31% in the last 3 months, which is good for shareholders and can also explain a decrease in the dividend yield.

See our latest analysis for Daihatsu Diesel Mfg

Daihatsu Diesel Mfg’s Payment Could Potentially Have Solid Earnings Coverage

Solid dividend yields are great, but they only really help us if the payment is sustainable. Before making this announcement, Daihatsu Diesel Mfg was easily earning enough to cover the dividend. As a result, a large proportion of what it earned was being reinvested back into the business.

Over the next year, EPS is forecast to expand by 0.9%. Assuming the dividend continues along recent trends, we think the payout ratio could be 26% by next year, which is in a pretty sustainable range.

TSE:6023 Historic Dividend January 3rd 2025

Daihatsu Diesel Mfg Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2015, the annual payment back then was ¥8.00, compared to the most recent full-year payment of ¥39.00. This works out to be a compound annual growth rate (CAGR) of approximately 17% a year over that time. 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

Some investors will be chomping at the bit to buy some of the company’s stock based on its dividend history. It’s encouraging to see that Daihatsu Diesel Mfg has been growing its earnings per share at 24% a 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.

Daihatsu Diesel Mfg Looks Like A Great Dividend Stock

It is generally not great to see the dividend being cut, but we don’t think this should happen much if at all in the future given that Daihatsu Diesel Mfg has the makings of a solid income stock moving forward. Reducing the amount it is paying as a dividend can protect the company’s balance sheet, keeping the dividend sustainable for longer. 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 Daihatsu Diesel Mfg 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.

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