Tokyo Century Corporation (TSE:8439) has announced that it will be increasing its dividend from last year’s comparable payment on the 3rd of December to ¥34.00. Based on this payment, the dividend yield for the company will be 3.6%, which is fairly typical for the industry.
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Tokyo Century’s Projected Earnings Seem Likely To Cover Future Distributions
Solid dividend yields are great, but they only really help us if the payment is sustainable. Before making this announcement, Tokyo Century was paying a whopping 99% as a dividend, but this only made up 36% of its overall earnings. A cash payout ratio this high could put the dividend under pressure and force the company to reduce it in the future if it were to run into tough times.
Looking forward, earnings per share is forecast to rise by 7.3% over the next year. If the dividend continues on this path, the payout ratio could be 40% by next year, which we think can be pretty sustainable going forward.
TSE:8439 Historic Dividend September 2nd 2025
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Tokyo Century Has A Solid Track Record
The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. The annual payment during the last 10 years was ¥16.00 in 2015, and the most recent fiscal year payment was ¥68.00. This means that it has been growing its distributions at 16% per annum 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 Has Growth Potential
Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. We are encouraged to see that Tokyo Century has grown earnings per share at 6.0% per year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for Tokyo Century’s prospects of growing its dividend payments in the future.
In Summary
Overall, we always like to see the dividend being raised, but we don’t think Tokyo Century will make a great income stock. While the low payout ratio is a redeeming feature, this is offset by the minimal cash to cover the payments. We don’t think Tokyo Century is a great stock to add to your portfolio if income is your focus.
Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. However, there are other things to consider for investors when analysing stock performance. For example, we’ve identified 2 warning signs for Tokyo Century (1 is a bit unpleasant!) that you should be aware of before investing. 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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