Japan Pulp and Paper Company Limited (TSE:8032) has announced that it will be increasing its dividend from last year’s comparable payment on the 30th of June to ¥20.00. This will take the dividend yield to an attractive 4.2%, providing a nice boost to shareholder returns.
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 Japan Pulp and Paper’s stock price has increased by 34% in the last 3 months, which is good for shareholders and can also explain a decrease in the dividend yield.
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Japan Pulp and Paper’s Projections Indicate Future Payments May Be Unsustainable
A big dividend yield for a few years doesn’t mean much if it can’t be sustained. Before making this announcement, Japan Pulp and Paper’s dividend was higher than its profits, but the free cash flows quite comfortably covered it. Healthy cash flows are always a positive sign, especially when they quite easily cover the dividend.
Looking forward, EPS could fall by 0.2% if the company can’t turn things around from the last few years. Assuming the dividend continues along recent trends, we believe the payout ratio could reach 152%, which could put the dividend under pressure if earnings don’t start to improve.
TSE:8032 Historic Dividend January 10th 2026
View our latest analysis for Japan Pulp and Paper
Japan Pulp and Paper 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 ¥10.00 in 2016, and the most recent fiscal year payment was ¥40.00. This implies that the company grew its distributions at a yearly rate of about 15% over that duration. Rapidly growing dividends for a long time is a very valuable feature for an income stock.
Dividend Growth May Be Hard To Achieve
Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Unfortunately things aren’t as good as they seem. Although it’s important to note that Japan Pulp and Paper’s earnings per share has basically not grown from where it was five years ago, which could erode the purchasing power of the dividend over time.
Our Thoughts On Japan Pulp and Paper’s Dividend
In summary, while it’s always good to see the dividend being raised, we don’t think Japan Pulp and Paper’s payments are rock solid. The company has been bring in plenty of cash to cover the dividend, but we don’t necessarily think that makes it a great dividend stock. We don’t think Japan Pulp and Paper is a great stock to add to your portfolio if income is your focus.
Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For instance, we’ve picked out 4 warning signs for Japan Pulp and Paper that investors should take into consideration. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.
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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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